Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 13, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Entity Registrant Name | DELMAR BANCORP | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,807,639 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000832090 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and due from banks | $ 29,882 | $ 36,295 |
Interest bearing deposits in other financial institutions | 23,221 | 27,586 |
Federal funds sold | 31,587 | 31,230 |
Cash and cash equivalents | 84,690 | 95,111 |
Securities available for sale, at fair value | 104,652 | 106,256 |
Loans held for sale, at fair value | 5,190 | 3,555 |
Loans, less allowance for credit losses of $7,819 at March 31, 2020 and $7,304 at December 31, 2019 | 1,007,370 | 986,684 |
Accrued interest receivable on loans and investment securities | 3,302 | 3,138 |
Premises and equipment, at cost, less accumulated depreciation | 13,454 | 13,705 |
Federal Home Loan Bank stock, at cost | 4,959 | 5,180 |
Atlantic Central Bankers Bank stock, at cost | 131 | 131 |
Other investments | 2,849 | 2,838 |
Bank owned life insurance | 7,867 | 7,817 |
Other real estate owned | 2,417 | 2,417 |
Core deposit intangible | 3,190 | 3,373 |
Goodwill | 9,391 | 9,391 |
Other assets | 12,981 | 13,074 |
Total assets | 1,262,443 | 1,252,670 |
Deposits: | ||
Non interest bearing demand | 268,226 | 261,631 |
NOW | 83,758 | 76,947 |
Savings and money market | 233,754 | 222,975 |
Time, $100,000 or more | 276,152 | 274,387 |
Other time | 158,834 | 170,841 |
Deposits, Total | 1,020,724 | 1,006,781 |
Accrued interest payable on deposits | 584 | 572 |
Short-term borrowings with the Federal Home Loan Bank | 21,200 | 48,000 |
Long-term borrowings with the Federal Home Loan Bank | 68,466 | 48,830 |
Subordinated notes payable | 6,500 | 6,500 |
Other borrowings | 1,113 | 1,249 |
Other liabilities | 10,284 | 9,861 |
Total liabilities | 1,128,871 | 1,121,793 |
COMMITMENTS, CONTINGENCIES & SUBSEQUENT EVENT | ||
STOCKHOLDERS’ EQUITY | ||
Common stock, par value $.01, authorized 40,000,000 shares, issued and outstanding 17,807,639 as of March 31, 2020 and 17,790,181 as of December 31, 2019 | 178 | 178 |
Surplus | 87,538 | 87,437 |
Retained earnings | 43,746 | 41,785 |
Noncontrolling interest in consolidated subsidiaries | 709 | 738 |
Accumulated other comprehensive income, net of tax | 1,401 | 739 |
Total stockholders’ equity | 133,572 | 130,877 |
Total liabilities and stockholders’ equity | $ 1,262,443 | $ 1,252,670 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance for credit losses | $ 7,819 | $ 7,304 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 17,807,639 | 17,790,181 |
Common stock, shares outstanding | 17,807,639 | 17,790,181 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
INTEREST INCOME ON: | ||
Loans, including fees | $ 13,359 | $ 8,466 |
Investment securities: | ||
Taxable | 435 | 181 |
Exempt from Federal income tax | 225 | 144 |
Federal funds sold | 97 | 15 |
Other interest income | 233 | 176 |
TOTAL INTEREST INCOME | 14,349 | 8,982 |
INTEREST EXPENSE ON: | ||
Deposits | 2,587 | 1,346 |
Borrowings | 652 | 422 |
TOTAL INTEREST EXPENSE | 3,239 | 1,768 |
NET INTEREST INCOME | 11,110 | 7,214 |
Provisions for credit losses | 648 | 300 |
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 10,462 | 6,914 |
OTHER INCOME: | ||
Service charges on deposit accounts | 289 | 287 |
Gain on sale of investment securities | 127 | |
Other income | 1,137 | 471 |
TOTAL OTHER INCOME | 1,553 | 758 |
OTHER EXPENSES: | ||
Salaries and employee benefits | 4,779 | 2,838 |
Premises and equipment | 1,124 | 938 |
Amortization of core deposit intangible | 183 | 76 |
Gains on other real estate owned | (1) | |
Other expenses | 2,703 | 1,760 |
TOTAL OTHER EXPENSES | 8,789 | 5,611 |
INCOME BEFORE TAXES ON INCOME | 3,226 | 2,061 |
Federal and state income taxes | 804 | 663 |
NET INCOME | 2,422 | 1,398 |
Net (income) attributable to noncontrolling interest | (16) | |
NET INCOME ATTRIBUTABLE TO DELMAR BANCORP | $ 2,406 | $ 1,398 |
Earnings per common share | ||
Basic earnings per share | $ 0.135 | $ 0.140 |
Diluted | $ 0.135 | $ 0.140 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||
NET INCOME | $ 2,422 | $ 1,398 |
OTHER COMPREHENSIVE INCOME, NET OF TAX: | ||
Unrealized holding gains on securities available for sale arising during the period | 1,027 | 860 |
Deferred income tax liabilities | (272) | (228) |
Other comprehensive income, net of tax | 755 | 632 |
Reclassification adjustment for gains included in net income | (127) | |
Deferred income tax benefits | 34 | |
Other comprehensive income, net of tax | (93) | |
TOTAL OTHER COMPREHENSIVE INCOME | 662 | 632 |
COMPREHENSIVE INCOME | 3,084 | 2,030 |
COMPREHENSIVE (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTEREST | (16) | |
COMPREHENSIVE INCOME ATTRIBUTABLE TO DELMAR BANCORP | $ 3,068 | $ 2,030 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Surplus | Retained Earnings | Noncontrolling Interest | Accumulated Other Comprehensive Income (Loss) | Total |
Balances at Dec. 31, 2018 | $ 100 | $ 29,470 | $ 37,149 | $ (731) | $ 65,988 | |
COMPREHENSIVE INCOME | ||||||
NET INCOME | 1,398 | 1,398 | ||||
Other comprehensive income, net of tax: | ||||||
Unrealized holding gains on securities available for sale arising during the period | 632 | 632 | ||||
COMPREHENSIVE INCOME | 2,030 | |||||
Cash dividends | (250) | (250) | ||||
Stock-based compensation expense recognized in earnings, net of employee tax obligation | 5 | 5 | ||||
Balances at Mar. 31, 2019 | 100 | 29,475 | 38,297 | (99) | 67,773 | |
Balances at Dec. 31, 2019 | 178 | 87,437 | 41,785 | $ 738 | 739 | 130,877 |
COMPREHENSIVE INCOME | ||||||
NET INCOME | 2,406 | 16 | 2,422 | |||
Other comprehensive income, net of tax: | ||||||
Unrealized holding gains on securities available for sale arising during the period | 755 | 755 | ||||
Reclassification adjustment for gains included in net income | (93) | (93) | ||||
COMPREHENSIVE INCOME | 3,084 | |||||
Cash dividends | (445) | (445) | ||||
Minority interest equity distribution | (45) | (45) | ||||
Stock option exercises, net | 86 | 86 | ||||
Warrant exercises, net | 10 | 10 | ||||
Stock-based compensation expense recognized in earnings, net of employee tax obligation | 5 | 5 | ||||
Balances at Mar. 31, 2020 | $ 178 | $ 87,538 | $ 43,746 | $ 709 | $ 1,401 | $ 133,572 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | ||
Cash dividends per share | $ 0.025 | $ 0.025 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 2,406 | $ 1,398 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Provision for credit losses and unfunded commitments | 648 | 300 | |
Depreciation | 356 | 281 | |
Amortization and accretion | 164 | 124 | |
Gain on investment securities | (96) | ||
Gain on equity securities | (31) | ||
Gain on sale of loans held for sale, originated | (435) | ||
Increase in bank owned life insurance cash surrender value | (50) | ||
Deferred income tax (benefits) expenses | (366) | 462 | |
Stock‑based compensation expense, net of employee tax obligation | 5 | 5 | |
Changes in assets and liabilities: | |||
Increase in loans held for sale | (1,199) | ||
Increase in accrued interest receivable | (165) | (133) | |
Decrease (increase) in other assets | 516 | (3,432) | |
(Decrease) increase in accrued interest payable | (9) | 62 | |
Increase in other liabilities | 295 | 3,675 | |
Net cash provided by operating activities | 2,039 | 2,742 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of securities available for sale | (6,315) | (1,124) | |
Proceeds from maturities and paydowns of securities available for sale | 8,831 | 1,713 | |
Net increase in loans | (21,334) | (17,297) | |
Purchases of premises and equipment | (105) | (212) | |
Proceeds from sales of Federal Home Loan Bank stock | 272 | 810 | |
Purchase of Federal Home Loan Bank stock | (51) | (919) | |
Net cash used by investing activities | (18,702) | (17,029) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Increase in demand, NOW, money market, and savings deposits, net | 24,185 | 948 | |
Cash received for the exercise of stock options | 85 | ||
Cash received for the exercise of warrants | 10 | ||
(Decrease) increase in time deposits, net | (10,243) | 14,802 | |
Decrease in other borrowings, net | (7,301) | (1,165) | |
Net decrease in minority interest contributed capital | (29) | ||
Decrease in finance lease liability | (20) | ||
Dividends paid | (445) | (250) | |
Net cash provided by financing activities | 6,242 | 14,335 | |
Net (decrease) increase in cash and cash equivalents | (10,421) | 48 | |
Cash and cash equivalents, beginning of period | 95,111 | 29,694 | $ 29,694 |
Cash and cash equivalents, end of period | 84,690 | 29,742 | $ 95,111 |
Supplementary cash flow information: | |||
Interest paid | 3,227 | 1,706 | |
Income taxes paid | 25 | ||
Total appreciation on securities available for sale | $ 901 | 860 | |
SUPPLEMENTARY NON‑CASH INVESTING ACTIVITIES | |||
Loans converted to other real estate owned | $ 209 |
Nature of Business and Its Sign
Nature of Business and Its Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Nature of Business and Its Significant Accounting Policies | |
Nature of Business and Its Significant Accounting Policies | Note 1. Nature of Business and Its Significant Accounting Policies Delmar Bancorp (the “Company”) is a multi-bank holding company with two wholly owned subsidiaries (the ”Subsidiaries”), The Bank of Delmarva (“Delmarva”), a commercial bank headquartered in Seaford, Delaware and operating primarily in Wicomico and Worcester counties in Maryland, Sussex County in Delaware, and Camden and Burlington counties in New Jersey, and Virginia Partners Bank (“Partners”), a commercial bank headquartered in Fredericksburg, Virginia and operating primarily in and around the Greater Fredericksburg, Virginia area, including Stafford County, Spotsylvania County, King George County, Caroline County, and the City of Fredericksburg, Virginia. Partners also operates in Anne Arundel County and the three counties of Southern Maryland, including Charles County, Calvert County, and St. Mary;s County. The Subsidiaries engage in the general banking business and provide a broad range of financial services to individual and corporate customers, and are subject to competition from other financial institutions. The Subsidiaries are also subject to the regulations of certain Federal and state agencies and undergo periodic examinations by those regulatory authorities. The accounting and reporting policies of the Company and its Subsidiaries conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and practices within the banking industry. Significant accounting policies not disclosed elsewhere in the consolidated financial statements are as follows: Principles of Consolidation: The consolidated financial statements include the accounts of the Company; the Subsidiaries, along with their consolidated subsidiaries: Delmarva Real Estate Holdings, LLC., a wholly owned subsidiary of Delmarva, which is a real estate holding company; Davie Circle, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; Delmarva BK Holdings, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; DHB Development, LLC, of which Delmarva holds a 40.55% interest, and is a real estate holding company; West Nithsdale Enterprises, LLC, of which Delmarva holds a 10% interest, and is a real estate holding company; and FBW, LLC, of which Delmarva holds 50% interest, and is a real estate holding company; Bear Holdings, Inc., a wholly owned subsidiary of Partners, and is a real estate holding company; Johnson Mortgage Company, LLC, of which Partners owns 51% interest, and is a residential mortgage company; and 410 William Street, LLC, a wholly owned subsidiary of Partners, and which holds investment property. All significant intercompany accounts and transactions have been eliminated in consolidation. Financial Statement Presentation: The unaudited interim consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations, changes in stockholder's equity, and cash flows in conformity with U.S. GAAP. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position at March 31, 2020 and December 31, 2019, the results of its operations and its cash flows for the three months ended March 31, 2020 and 2019 in conformity with U.S. GAAP. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, or for any other period. Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Securities Available for Sale: Marketable debt and equity securities not classified as held to maturity are classified as available for sale. Securities available for sale are acquired as part of the Subsidiaries' asset/liability management strategy and may be sold in response to changes in interest rates, loan demand, changes in prepayment risk, and other factors. Securities available for sale are carried at fair value as determined by quoted market prices. Unrealized gains or losses based on the difference between amortized cost and fair value are reported in other comprehensive income, net of deferred tax. Realized gains and losses, using the specific identification method, are included as a separate component of other income (expense) and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. Additionally, declines in the fair value of individual investment securities below their cost that are other than temporary are reflected as realized losses in the consolidated statements of income. Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of recoverability, all relevant information is considered, including the length of time and extent to which fair value has been less than the amortized cost basis, the cause of the price decline, credit performance of the issuer and underlying collateral, and recoveries or further declines in fair value subsequent to the balance sheet date. For debt securities, the Company measures and recognizes other-than-temporary impairment (“OTTI”) losses through earnings if (1) the Company has the intent to sell the security or (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. In these circumstances, the impairment loss is equal to the full difference between the amortized cost basis and the fair value of the security. For securities that are considered OTTI that the Company has the intent and ability to hold in an unrealized loss position, the OTTI write-down is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to other factors, which is recognized as a component of other comprehensive income (“OCI”). For equity securities, the Company recognizes OTTI losses through earnings if the Company intends to sell the security. The Company also considers other relevant factors, including its intent and ability to retain the security for a period of time sufficient to allow for any anticipated recovery in market value, and whether evidence exists to support a realizable value equal to or greater than the carrying value. Any OTTI loss on an equity security is equal to the full difference between the amortized cost basis and the fair value of the security. Equity Securities: Equity securities with readily determinable fair values are carried at fair value, with changes in fair value reported in net income. Any equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. The entirety of any impairment on equity securities is recognized in earnings. Other Securities: Federal Home Loan Bank (“FHLB”) stock, at cost, and Atlantic Central Bankers Bank (“ACBB”), at cost, Community Bankers Bank (“CBB”) and Maryland Financial Bank (“MFB”) are equity interests in the FHLB, ACBB, CBB and MFB, respectively. These securities do not have a readily determinable fair value for purposes of Accounting Standards Codification (“ASC”) 320‑10 Investments‑Debts and Equity Securities because their ownership is restricted and they lack an active market. As there is no readily determinable fair value for these securities, they are carried at cost less any OTTI. Other investments consists of an equity ownership of Solomon Hess SBA Loan Fund LLC which the value is adjusted for its prorata share of assets in the fund and investment in the stock of the Federal Reserve Bank (“FRB”). Bank Owned Life Insurance: The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other changes or amounts due that are probable at settlement. Loans and the Allowance for Credit Losses: Loans are generally carried at the amount of unpaid principal, adjusted for unearned loan fees, which are amortized over the term of the loan using the effective interest rate method. Interest on loans is accrued based on the principal amounts outstanding. It is the Subsidiaries' policy to discontinue the accrual of interest when a loan is specifically determined to be impaired or when principal or interest is delinquent for ninety days or more. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Cash collections on such loans are applied as reductions of the loan principal balance and no interest income is recognized on those loans until the principal balance has been collected. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. The carrying value of impaired loans is based on the present value of the loan's expected future cash flows or, alternatively, the observable market price of the loan or the fair value of the collateral. The allowance for credit losses is maintained at a level believed adequate by management to absorb probable losses inherent in the loan portfolio and is based on the size and current risk characteristics of the loan portfolio, an assessment of individual problem loans and actual loss experience, the value of the underlying collateral, and current economic events in specific industries and geographical areas, including unemployment levels, and other pertinent factors, including regulatory guidance and general economic conditions. Determination of the allowance is inherently subjective, as it requires significant estimates, including the amounts and timing on historical loss experience, and consideration of current economic trends, all of which may be susceptible to significant change. Loan losses are charged off against the allowance, while recoveries of amounts previously charged off are credited to the allowance. A provision for credit losses is charged to operations based on management's periodic evaluation of the factors previously mentioned, as well as other pertinent factors. Evaluations are conducted at least monthly and more often if deemed necessary. The allowance for credit losses typically consists of an allocated component and an unallocated component. The allocated component of the allowance for credit losses reflects expected losses resulting from analyses developed through specific credit allocations for individual loans and historical loss experience for each loan category. The specific credit allocations are based on regular analyses of all loans over a fixed‑dollar amount where the internal credit rating is at or below a predetermined classification. The historical loan loss element is determined statistically using an informal loss migration analysis that examines loss experience and the related internal gradings of loans charged off over a current three (3) year period. The loss migration analysis is performed quarterly and loss factors are updated regularly based on actual experience. The allocated component of the allowance for credit losses also includes consideration of concentrations and changes in portfolio mix and volume. Any unallocated portion of the allowance reflects management's estimate of probable inherent but undetected losses within the portfolio due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower's financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet manifested themselves in loss allocation factors. In addition, the unallocated allowance includes a component that explicitly accounts for the inherent imprecision in loan loss migration models. The historical losses used in the migration analysis may not be representative of actual unrealized losses inherent in the portfolio. It is management's intent to continually refine the methodology for the allowance for credit losses in an attempt to directly allocate potential losses in the loan portfolio under ASC Topic 310 and minimize the unallocated portion of the allowance for credit losses. Loan Charge‑off Policies Loans are generally fully or partially charged down to the fair value of securing collateral when: · management deems the asset to be uncollectible; · repayment is deemed to be made beyond the reasonable time frames; · the asset has been classified as a loss by internal or external review; and · the borrower has filed bankruptcy and the loss becomes evident owing to a lack of assets. Acquired Loans Loans acquired in connection with business combinations are recorded at their acquisition‑date fair value with no carry over of related allowance for credit losses. Any allowance for credit loss on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition‑date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment. Acquired loans that meet the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans, including the impact of any accretable yield. Loans acquired with deteriorated credit quality are accounted for in accordance with ASC 310‑30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310‑30) if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected. At acquisition, the Company considers several factors as indicator that an acquired loan has evidence of deterioration in credit quality. These factors include; loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non‑accrual by the acquired institution, and loans that have been previously modified in a troubled debt restructuring. Under the ASC 310‑30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable yield is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method). If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan's total scheduled principal and interest payment over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non‑accretable difference. The non‑accretable difference represents contractually required principal and interest payments which the Company does not expect to collect. Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for credit losses resulting in an increase in the allowance for credit losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowa,nces recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable yield to be subsequently recognized as interest income on a prospective basis over the loan's remaining life. Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310‑20, Nonrefundable Fees and Other Costs (ASC 310‑20), whereby the premium or discount derived from the fair market value adjustment, on a loan‑by‑loan or pooled basis, is recognized into interest income on a level yield basis over the remaining expected life of the loan or pool. Troubled Debt Restructurings A loan is accounted for and reported as a troubled debt restructuring (“TDR”) when, for economic or legal reasons, we grant a concession to a borrower experiencing financial difficulty that we would not otherwise consider. Management strives to identify borrowers in financial difficulty early and works with them to modify to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. A restructuring that results in only an insignificant delay in payment is not considered a concession. A delay may be considered insignificant if the payments subject to the delay are insignificant relative to the unpaid principal or collateral value and the contractual amount due, or the delay in timing of the restructured payment period is insignificant relative to the frequency of the payments, the debt’s original contractual maturity or original expected duration. TDRs are designated as impaired loans because interest and principal payments will not be received in accordance with the original contract terms. TDRs that are performing and on accrual status as of the date of the modification remain on accrual status. TDRs that are nonperforming as of the date of modification generally remain as nonaccrual until the prospect of future payments in accordance with the modified loan agreement is reasonably assured, generally demonstrated when the borrower maintains compliance with the restructured terms for a predetermined period, normally at least six months. TDRs with temporary below-market concessions remain designated as a TDR and impaired regardless of the accrual or performance status until the loan is paid off. However, if the TDR loan has been modified in a subsequent restructure with market terms and the borrower is not currently experiencing financial difficulty, then the loan may be no longer designated as a TDR. Loans Held for Sale: These loans consist of loans made through Partners’ majority owned subsidiary Johnson Mortgage Company, LLC (“JMC”). JMC is engaged in the mortgage brokerage business in which JMC originates, closes, and immediately sells mortgage loans and related servicing rights to permanent investors in the secondary market. JMC has written commitments from several permanent investors (large financial institutions) and only closes loans that meet the lending requirements of the permanent investors. Loans are made in connection with the purchase or refinancing of existing and new one-to-four family residences primarily in southeastern and northern Virginia. Loans are initially funded primarily by JMC’s lines of credit. With the concurrent sale and delivery of mortgage loans to the permanent investors, JMC records receivables for mortgage loans sold and recognizes the related gains and losses on such sales. The receivables for mortgage loans sold are usually satisfied within 30 days of sale, whereupon the related borrowings on the lines of credit are repaid. Because of the short holding period, these loans are carried at the lower of cost or market and no market adjustments were deemed necessary in the first quarter of 2020 or during 2019. JMC’s agreements with its permanent investors include provisions that could require JMC to repurchase loans under certain circumstances, and also provide for the assessment of fees if loans go into default or are refinanced within specified periods of time. JMC has never been required to repurchase a loan and no allowance has been made as of March 31, 2020 or December 31, 2019 for possible repurchases. Management does not believe that a provision for early default or refinancing costs is necessary at March 31, 2020 or December 31, 2019. JMC e,nters into commitments with its customers to originate loans where the interest rate on the loans is determined (locked) prior to funding. While this subjects JMC to the risk that interest rates may change from the commitment date to the funding date, JMC simultaneously enters into financial agreements (best efforts forward sales commitments) with its permanent investors giving JMC the right to deliver (put) loans to the investors at specified yields, thus enabling JMC to manage its exposure to changes in interest rates such that JMC is not subject to fluctuations in fair values of these agreements due to changes in interest rates. However, a default by a permanent investor required to purchase loans under such an agreement would expose JMC to potential fluctuation in selling prices of loans due to changes in interest rate. The fair value of rate lock commitments and forward sales commitments was considered immaterial at March 31, 2020 and December 31, 2019. Gains and losses on the sale of mortgages as well as origination fees, brokerage fees, interest rate lock-in fees and other fees paid by mortgagors are include in other income on the Company’s consolidated statements of income. Other Real Estate Owned (OREO): OREO comprises properties acquired in partial or total satisfaction of problem loans. The properties are recorded at the lower of cost or fair value at the date acquired. Losses arising at the time of acquisition of such properties are charged against the allowance for credit losses. Subsequent write‑downs that may be required and expenses of operation are included in other expenses. Gains and losses realized from the sale of OREO are included in other income. At March 31, 2020 and December 31, 2019 there were four properties with a combined estimated value of $ 2.4 million included in OREO. Intangible Assets and Amortization: During the fourth quarter of 2019, the Company acquired Partners. ASC 350, Intangibles‑Goodwill and Other (ASC 350), prescribes accounting for intangible assets subsequent to initial recognition. Acquired intangible assets (such as core deposit intangibles) are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. Intangible assets related to the acquisition are amortized (See Note 12 – Goodwill and Intangible Assets for further information). Accounting for Stock Based Compensation: The Company follows ASC 718‑10, Compensation—Stock Compensation (“ASC 718-10”) for accounting and reporting for stock‑based compensation plans. ASC 718‑10 defines a fair value at grant date to be used for measuring compensation expense for stock‑based compensation plans to be recognized in the statement of income. During 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016‑10 Technical Corrections and Improvements, which replaced the definition of fair value previously used in ASC Topic 718 with the definition of fair value from ASC Topic 820, Fair Value Measurement (“ASC Topic 820”). The amendments affecting ASC 718‑10 were effective and applied prospectively by the Company beginning January 1, 2016. Management believes the resulting change in fair value measurement methodology is immaterial to the financial statements. Earnings Per Share: Basic earnings per common share are determined by dividing net income adjusted for preferred stock dividends declared and/or accumulated and accretion of warrants by the weighted average number of shares outstanding for each period, giving retroactive effect to stock splits and dividends. Weighted average common shares outstanding were 17,805,714 and 9,985,321 for the three month periods ended March 31, 2020 and 2019, respectively. Calculations of diluted earnings per common share include the average dilutive common stock equivalents outstanding during the period, unless they are anti‑dilutive. Dilutive common equivalent shares consist of stock options calculated using the treasury stock method and restricted stock awards (See Note 8 – Earnings Per Share for further information). |
Investment Securities
Investment Securities | 3 Months Ended |
Mar. 31, 2020 | |
Investment Securities | |
Investment Securities | Note 2. Investment Securities Securities available for sale are as follows: March 31, 2020 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 5,761 $ 205 $ — $ 5,966 Obligations of States and political subdivisions 34,942 855 409 35,388 Mortgage-backed securities 57,113 1,239 33 58,319 Subordinated debt investments 2,988 68 43 3,013 Equity securities 1,966 — — 1,966 $ 102,770 $ 2,367 $ 485 $ 104,652 December 31, 2019 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 10,186 $ 162 $ 36 $ 10,312 Obligations of States and political subdivisions 33,885 716 43 34,558 Mortgage-backed securities 56,275 236 90 56,421 Subordinated debt investments 2,988 42 — 3,030 Equity securities 1,935 — — 1,935 $ 105,269 $ 1,156 $ 169 $ 106,256 Gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2020 and December 31, 2019, are as follows: March 31, 2020 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ — $ — $ — $ — $ — $ — Obligations of States and political subdivisions 9,027 409 — — 9,027 409 Mortgage-backed securities 1,587 33 — — 1,587 33 Subordinated debt investments 952 43 — — 952 43 Total securities with unrealized losses $ 11,566 $ 485 $ — $ — $ 11,566 $ 485 December 31, 2019 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ 5,269 $ 34 $ 2,000 $ 2 $ 7,269 $ 36 Obligations of States and political subdivisions 4,669 43 — — 4,669 43 Mortgage-backed securities 11,600 32 4,489 58 16,089 90 Subordinated debt investments — — — — — — Total securities with unrealized losses $ 21,538 $ 109 $ 6,489 $ 60 $ 28,027 $ 169 For individual securities classified as either available for sale or held to maturity, the Company must determine whether a decline in fair value below the amortized cost basis is other than temporary. In estimating OTTI losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near‑term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. If the decline in fair value is considered to be other than temporary, the cost basis of the individual security shall be written down to the fair value as a new cost basis and the amount of the write‑down shall be included in earnings (that is, accounted for as a realized loss). Contractual maturities of investment securities at March 31, 2020 are shown below. Actual maturities may differ from contractual maturities because debtors may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage‑backed securities have no stated maturity and primarily reflect investments in various Pass‑through and Participation Certificates issued by the Federal National Mortgage Association and the Government National Mortgage Association. Repayment of mortgage‑backed securities is affected by the contractual repayment terms of the underlying mortgages collateralizing these obligations and the current level of interest rates. The following is a summary of maturities, calls, or repricing of securities available for sale: March 31, 2020 Securities Available for Sale Dollars in Thousands Amortized Fair Cost Value Due in one year or less $ 1,250 $ 1,253 Due after one year through five years 1,862 1,890 Due after five years through ten years 19,210 19,518 Due after ten years or more 23,335 23,672 Mortgage-backed securities, due in monthly installments 57,113 58,319 $ 102,770 $ 104,652 |
Loans, Allowance for Credit Los
Loans, Allowance for Credit Losses and Impaired Loans | 3 Months Ended |
Mar. 31, 2020 | |
Loans, Allowance for Credit Losses and Impaired Loans | |
Loans, Allowance for Credit Losses and Impaired Loans | Note 3. Loans, Allowance for Credit Losses and Impaired Loans Major categories of loans as of March 31, 2020 and December 31, 2019 are as follows: (Dollars in thousands) At March 31, 2020 At December 31, 2019 Originated Loans Real Estate Mortgage Construction and land development $ 69,455 $ 59,236 Residential real estate 114,748 108,590 Nonresidential 347,059 325,916 Home equity loans 16,177 13,736 Commercial 61,952 52,838 Consumer and other loans 3,114 2,669 612,505 562,985 Acquired Loans Real Estate Mortgage Construction and land development $ 21,417 $ 26,034 Residential real estate 92,084 101,088 Nonresidential 211,435 222,075 Home equity loans 21,419 24,176 Commercial 58,964 60,675 Consumer and other loans 2,898 3,091 408,217 437,139 Total Loans Real Estate Mortgage Construction and land development $ 90,872 $ 85,270 Residential real estate 206,832 209,678 Nonresidential 558,494 547,991 Home equity loans 37,596 37,912 Commercial 120,916 113,513 Consumer and other loans 6,012 5,760 1,020,722 1,000,124 Less: Unamortized discounts on acquired loans (5,533) (6,136) Less: Allowance for credit losses (7,819) (7,304) $ 1,007,370 $ 986,684 Allowance for Credit Losses Management has an established methodology to determine the adequacy of the allowance for credit losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for credit losses, the Company has segmented the loan portfolio into the following classifications: · Other Real Estate Secured o Commercial Real Estate o Construction and Land Development o Farmland o Multifamily · 1 – 4 Family Residential Secured · Other o Commercial and Industrial o Consumer Loans o Other Loans Each of these segments are reviewed and analyzed quarterly using the weighted average historical charge‑offs over a current three year period for their respective segments as well as the following qualitative factors: · Changes in the levels and trends in delinquencies, non‑accruals, classified assets and TDRs · Changes in the nature and volume of the portfolio · Effects of any changes in lending policies, procedures, including underwriting standards and collections, charge off and recovery practices · Changes in the experience, depth and ability of management · Changes in the national and local economic conditions and developments, including the condition of various market segments · Changes in the concentration of credits within each pool · Changes in the quality of the Company’s loan review system and the degree of oversight by the Company’s Board of Directors · Changes in external factors such as competition and the legal environment. The above factors result in a FAS 5, as codified in FASB ASC 450‑10‑ 20, calculated reserve for environmental factors. All credit exposures graded at a rating of “non-pass” with outstanding balances less than or equal to $250 thousand and credit exposures graded at a rating of “pass” are reviewed and analyzed quarterly using the weighted average historical charge‑offs over a current three year period as a percentage of total charge‑offs for the same period for their respective segments as well as the qualitative factors discussed above. The weighted average historical percentage is further adjusted based on delinquency risk trend assessments and concentration risk assessments. All credit exposures graded at a rating of “non-pass” with outstanding balances greater than $250 thousand are to be reviewed no less than quarterly for the purpose of determining if a specific allocation is needed for that credit. The determination for a specific reserve is measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases management uses the current fair value of the collateral, less selling cost when foreclosure is probable, instead of discounted cash flows. If management determines that the value of the loan is less than the recorded investment in the loan (net of previous charge‑offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge‑off to the allowance. The establishment of a specific reserve does not necessarily mean that the credit with the specific reserve will definitely incur loss at the reserve level. It is only an estimation of potential loss based upon anticipated events. A specific reserve will not be established unless loss elements can be determined and quantified based on known facts. The total allowance reflects management's estimate of credit losses inherent in the loan portfolio as of March 31, 2020 and December 31, 2019. The following tables include impairment information relating to loans and the allowance for credit losses as of March 31, 2020 and December 31, 2019: Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at March 31, 2020 Individually evaluated for impairment: Balance in allowance $ — $ 181 $ 90 $ — $ 207 $ — $ — $ 478 Related loan balance 388 4,417 14,287 56 2,086 17 — 21,251 Collectively evaluated for impairment: Balance in allowance $ 718 $ 1,238 $ 4,253 $ 169 $ 678 $ 19 $ 266 $ 7,341 Related loan balance 90,106 202,064 540,973 37,373 117,485 5,937 — 993,938 Note: The balances above include unamortized discounts on acquired loans of $5 .5 million . Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at December 31, 2019 Individually evaluated for impairment: Balance in allowance $ — $ 216 $ 82 $ — $ 274 $ — $ — $ 572 Related loan balance 723 3,905 11,449 9 2,238 — — 18,324 Collectively evaluated for impairment: Balance in allowance $ 602 $ 1,164 $ 3,991 $ 142 $ 552 $ 14 $ 267 $ 6,732 Related loan balance 84,028 205,381 533,100 37,706 109,759 5,690 — 975,664 Note: The balances above include unamortized discounts on acquired loans of $6.1 million. The following tables provide a summary of the activity in the allowance for credit losses allocated by loan class for the three months ended March 31, 2020 and 2019. Allocation of a portion of the allowance to one loan class does not preclude its availability to absorb losses in other loan classes. March 31, 2020 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Quarter Ended Beginning Balance $ 602 $ 1,380 $ 4,074 $ 142 $ 826 $ 14 $ 266 $ 7,304 Charge-offs — (25) (38) — (66) (41) — (170) Recoveries — 4 3 10 7 13 — 37 Provision 116 60 304 17 118 33 — 648 Ending Balance $ 718 $ 1,419 $ 4,343 $ 169 $ 885 $ 19 $ 266 $ 7,819 March 31, 2019 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Quarter Ended Beginning Balance $ 647 $ 1,521 $ 3,629 $ 122 $ 641 $ 13 $ 490 $ 7,063 Charge-offs (11) — (191) (4) (98) (37) — (341) Recoveries 1 2 4 — 18 16 — 41 Provision (39) (14) 254 29 94 19 (43) 300 Ending Balance $ 598 $ 1,509 S 3,696 $ 147 $ 655 $ 11 $ 447 $ 7,063 The Company had an unallocated amount (overage) of approximately $266 thousand in the allowance that is reflected in the above table as of March 31, 2020. The Company had an unallocated amount (overage) of approximately $447 thousand in the allowance that is reflected in the above table as of March 31, 2019. Management believes this amount is adequate to absorb additional inherent, but as yet unidentified, losses in the loan portfolio. Credit Quality Information The following tables represent credit exposures by creditworthiness category at March 31, 2020 and December 31, 2019. The use of creditworthiness categories to grade loans permits management to estimate a portion of credit risk. The Company’s internal creditworthiness is based on experience with similarly graded credits. Loans that trend upward toward higher credit grades typically have less credit risk and loans that migrate downward typically have more credit risk. The Company’s internal risk ratings are as follows: 1 Excellent — minimal risk. Normally supported by pledged deposits, United States government securities, etc. 2 Superior — low risk. All of the risks associated with this credit based on each of the Subsidiaries creditworthiness criteria are minimal. 3 Good — moderately low risk. Most of the risks associated with this credit based on each of the bank's creditworthiness criteria are minimal. 4 Fair/Watch — moderate risk. The weighted overall risk associated with this credit based on each of the bank's creditworthiness criteria is acceptable. 5 Marginal — moderately high risk. The credit possesses deficiencies which corrective action by the bank would remedy and; should potentially be included on a watch list. 6 Substandard — The bank is inadequately protected and there exists the distinct possibility of sustaining some loss if not corrected. 7 Doubtful — Weaknesses make collection or liquidation in full, based on currently existing facts, improbable. 8 Loss — Of little value; not warranted as a bankable asset. Non‑accruals In general, a loan will be placed on non‑accrual status at the end of the reporting month in which the interest or principal is past due more than 90 days. Exceptions to the policy are those loans that are in the process of collection and are well-secured. A well‑secured loan is secured by collateral with sufficient market value to repay principal and all accrued interest. A summary of loans by risk rating is as follows: Real Estate Secured Construction & Land Residential Consumer & March 31, 2020 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Excellent $ — $ — $ 397 $ — $ 6,044 $ 107 $ 6,548 Superior — 134 3,580 122 2,071 — 5,907 Good 89,498 199,142 534,658 37,243 107,471 5,831 973,843 Fair 819 4,207 12,003 64 2,429 16 19,538 Marginal — — — — — — — Substandard 177 2,998 4,622 — 1,556 — 9,353 TOTAL $ 90,494 $ 206,481 $ 555,260 $ 37,429 $ 119,571 $ 5,954 $ 1,015,189 Non-Accrual $ 177 $ 1,508 $ 2,346 $ — $ 1,280 $ — $ 5,311 TDRs $ — $ 2,269 $ 7,437 $ — $ 1,207 $ — $ 10,913 Number of TDR accounts — 11 18 — 1 — 30 Breakdown of TDRs TDRs on Non-accrual $ — $ 866 $ 575 $ — $ 1,207 $ — $ 2,648 TDRs Past Due 30-89 days — 15 — — — — 15 Performing TDRs — 1,388 6,862 — — — 8,250 TOTAL $ — $ 2,269 $ 7,437 $ — $ 1,207 $ — $ 10,913 Total Non-performing TDR accounts $ — $ 881 $ 575 $ — $ 1,207 $ — $ 2,663 Number of non‑performing TDRs — 3 2 — 1 — 6 Real Estate Secured Construction & Land Residential Consumer & December 31, 2019 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Excellent $ — $ — $ 405 $ — $ 6,089 $ 111 $ 6,605 Superior — 139 3,652 122 1,818 1 5,732 Good 83,773 202,690 525,465 37,528 99,973 5,557 954,986 Fair 801 3,321 9,739 64 2,469 20 16,414 Marginal — — — — — — — Substandard 177 3,136 5,290 — 1,648 — 10,251 TOTAL $ 84,751 $ 209,286 $ 544,551 $ 37,714 $ 111,997 $ 5,689 $ 993,988 Non-Accrual $ 177 $ 1,620 $ 2,608 $ 5 $ 131 $ — $ 4,541 Troubled debt restructures $ — $ 2,323 $ 7,934 $ — $ 38 $ — $ 10,295 Number of TDR accounts — 12 20 — 1 — 33 Breakdown of TDRs TDRs on Non-accrual $ — $ 904 $ 926 $ — $ 38 $ — $ 1,868 TDRs Past Due 30-89 — — — — — — — Performing TDRs — 1,419 7,008 — — — 8,427 TOTAL $ — $ 2,323 $ 7,934 $ — $ 38 $ — $ 10,295 Total Non-performing TDR accounts $ — $ 904 $ 926 $ — $ 38 $ — $ 1,868 Number of non‑performing TDRs — 3 3 — 1 — 7 The following tables include an aging analysis of the recorded investment of past due financing receivables as of March 31, 2020 and December 31, 2019: Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At March 31, 2020 Past Due* Past Due** Past Due*** Past Due Balance Receivables*** and Accruing Dollars in Thousands Real Estate Construction and land development $ — $ 40 $ 177 $ 217 $ 90,655 $ 90,872 $ — Residential real estate 2,008 155 915 3,078 203,754 206,832 293 Nonresidential 1,631 42 1,570 3,243 555,251 558,494 — Home equity loans 19 — — 19 37,577 37,596 — Commercial 247 — 1,280 1,527 119,389 120,916 — Consumer and other loans 6 — — 6 6,006 6,012 — TOTAL $ 3,911 $ 237 $ 3,942 $ 8,090 $ 1,012,632 $ 1,020,722 $ 293 * Includes $ 1.5 million of non‑accrual loans. ** Includes $ 155 thousand of non-accrual loans. *** Includes $3.6 million of non-accrual loans. Total financing receivable balances do not include unamortized discounts on acquired loans of $5.5 million. Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At December 31, 2019 Past Due* Past Due** Past Due*** Past Due Balance Receivables*** and Accruing Dollars in Thousands Real Estate Construction and land development $ 424 $ — $ 177 $ 601 $ 84,669 $ 85,270 $ — Residential real estate 1,296 677 702 2,675 207,003 209,678 — Nonresidential 635 144 1,823 2,602 545,389 547,991 — Home equity loans — — — — 37,912 37,912 — Commercial 231 1,207 94 1,532 111,981 113,513 — Consumer and other loans 1 19 — 20 5,740 5,760 5 TOTAL $ 2,587 $ 2,047 $ 2,796 $ 7,430 $ 992,694 $ 1,000,124 $ 5 * Includes $95 6 thousand of non‑accrual loans. ** *** . Total financing receivable balances do not include unamortized discounts on acquired loans of $6.1 million. Impaired Loans Impaired loans are defined as non‑accrual loans, TDRs, purchased credit impaired loans (“PCI”) and loans risk rated a “6” or above. When management identifies a loan as impaired, the impairment is measured for potential loss based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases management uses the current fair value of the collateral, less selling cost when foreclosure is probable, instead of discounted cash flows. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge‑offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge‑off to the allowance. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on non‑accrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on non‑accrual status, contractual interest is credited to interest income when received, under the cash basis method. The following tables include the recorded investment and unpaid principal balances for impaired financing receivables with the associated allowance amount, if applicable. Management determined the specific reserve in the allowance based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral, less selling costs was used to determine the specific allowance recorded. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on non‑accrual status, all payments are applied to principal, under the cost recovery method. Unpaid Interest Average Recorded Principal Income Specific Recorded March 31, 2020 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 691 691 — 181 709 Nonresidential 2,411 2,449 69 90 2,433 Home equity loans — — — — — Commercial 1,207 1,207 11 207 1,240 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 4,309 $ 4,347 $ 80 $ 478 $ 4,382 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 388 $ 388 $ 3 $ — $ 556 Residential real estate 4,528 5,299 57 — 4,296 Nonresidential real estate 12,365 12,697 182 — 11,050 Home equity loans 56 56 1 — 32 Commercial 991 991 17 — 1,034 Consumer and other loans 17 17 — — 8 Total impaired loans with no specific reserve $ 18,345 $ 19,448 $ 260 $ — $ 16,976 TOTAL $ 22,654 $ 23,795 $ 340 $ 478 $ 21,358 Total impaired loans of $ 22.7 million at March 31, 2020 include PCI loan balances of $5.1 million, which are net of a discount of $989 thousand . Total impaired loans also included $620 thousand of loans which did not meet the criteria whereby an individual evaluation for impairment was required. These loans were pooled with all other loans not requiring an evaluation for individual impairment and reviewed and analyzed using the weighted average historical charge‑offs over a current three year period for their respective segments along with the qualitative factors stated previously in this disclosure, to result in a ASC 450‑10‑20 calculated reserve. Unpaid Interest Average Recorded Principal Income Specific Recorded December 31, 2019 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 727 727 — 216 2,337 Nonresidential 2,456 2,456 260 82 2,866 Home equity loans — — — — — Commercial 1,274 1,274 53 274 659 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 4,457 $ 4,457 $ 313 $ 572 $ 5,862 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 723 $ 545 $ 34 $ — $ 471 Residential real estate 4,064 4,717 243 — 4,566 Nonresidential 9,734 9,266 909 — 11,181 Home equity loans 9 9 17 — 351 Commercial 1,078 1,078 87 — 1,441 Consumer and other loans — — — — — Total impaired loans with no specific reserve $ 15,608 $ 15,615 $ 1,290 $ — $ 18,010 TOTAL $ 20,065 $ 20,072 $ 1,603 $ 572 $ 23,872 All acquired loans were initially recorded at fair value at the acquisition date. The outstanding balance and the carrying amount of acquired loans included in the consolidated balance sheet are as follows: Dollars in Thousands March 31, 2020 December 31, 2019 Accountable for under ASC 310-30 (PCI loans) Outstanding balance $ 6,123 $ 6,428 Carrying amount 5,134 5,373 Accountable for under ASC 310-20 (non-PCI loans) Outstanding balance $ 402,094 $ 430,711 Carrying amount 397,550 425,630 Total acquired loans Outstanding balance $ 408,217 $ 437,139 Carrying amount 402,684 431,003 The following table provides changes in accretable yield for all acquired loans accounted for under ASC 310‑20: Dollars in Thousands March 31, 2020 December 31, 2019 Balance at beginning of period $ 5,081 $ 745 Acquisitions — 4,990 Accretion (537) (654) Balance at end of period $ 4,544 $ 5,081 During the three months ended March 31, 2020, the Company recorded $70 thousand in accretion on acquired loans accounted for under ASC 310-30. During the three months ended March 31, 2019, the Company recorded $28 thousand in accretion on acquired loans accounted for under ASC 310-30. Non‑accretable yield on PCI loans was $ 1.6 million at March 31, 2020 and December 31, 2019. Concentration of Risk: The Company makes loans to customers located primarily within Anne Arundel, Charles, Calvert, St. Mary’s, Wicomico, and Worcester Counties, Maryland; Sussex County, Delaware; Camden and Burlington Counties, New Jersey; Stafford, Spotsylvania, King George, and Caroline Counties, Virginia; and the City of Fredericksburg, Virginia. A substantial portion of its loan portfolio consists of residential and commercial real estate mortgages. The ability of the Company’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in these areas. The Company had no commitments to loan additional funds to the borrowers of restructured, impaired, or non‑accrual loans as of March 31, 2020 and December 31, 2019. |
Credit Facilities
Credit Facilities | 3 Months Ended |
Mar. 31, 2020 | |
Credit Facilities | |
Credit Facilities | Note 4. Credit Facilities The Company owns capital stock of the FHLB as a condition for a $311.2 million convertible advance credit facility from the FHLB. As of March 31, 2020 the Company had remaining credit availability of $221.5 million under this facility. The following table details the advances the Company had outstanding with the FHLB at March 31, 2020 and December 31, 2019 and outstanding lines of credit: March 31, 2020 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate hybrid 12,000 1.31 April 2020 Fixed, at maturity Fixed rate hybrid 6,000 0.30 April 2020 Fixed, at maturity Fixed rate hybrid 3,200 0.30 April 2020 Fixed, at maturity Fixed rate hybrid 15,000 2.09 % June 2020 Fixed, paid monthly Fixed rate hybrid 5,000 3.04 % November 2020 Fixed, paid monthly Fixed rate hybrid 5,000 2.91 % November 2020 Fixed, paid quarterly Fixed rate hybrid 6,000 2.44 % April 2021 Fixed, paid quarterly Convertible* 10,000 2.68 % May 2021 Fixed, paid quarterly Fixed rate hybrid 5,000 3.15 % October 2022 Fixed, paid quarterly Principal reducing credit 1,286 1.62 % March 2023 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Principal reducing credit 1,380 1.99 % March 2026 Fixed, paid quarterly Total advances 89,666 December 31, 2019 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate 12,000 1.73 % January 2020 Fixed, at maturity Fixed rate 4,500 1.76 % January 2020 Fixed, at maturity Fixed rate 7,600 1.68 % January 2020 Fixed, at maturity Fixed rate 7,700 1.68 % January 2020 Fixed, at maturity Fixed rate 6,000 1.70 % January 2020 Fixed, at maturity Fixed rate 3,200 1.71 % January 2020 Fixed, at maturity Fixed rate 7,000 1.70 % January 2020 Fixed, at maturity Fixed rate hybrid 15,000 1.51 % June 2019 Fixed, paid monthly Fixed rate hybrid 5,000 3.04 % November 2020 Fixed, paid monthly Fixed rate hybrid 5,000 2.91 % November 2020 Fixed, paid quarterly Fixed rate hybrid 6,000 2.44 % April 2021 Fixed, paid quarterly Convertible** 10,000 2.68 % May 2021 Fixed, paid quarterly Fixed rate hybrid 5,000 3.15 % October 2022 Fixed, paid quarterly Principal reducing credit 1,393 1.62 % March 2023 Fixed, paid quarterly Principal reducing credit 1,437 1.99 % March 2026 Fixed, paid quarterly Total advances 96,830 * The FHLB has the option of converting the rate on this long-term borrowing to a three month LIBOR-based floating rate in May 2020. Average short‑term borrowings under FHLB approximated $45 million and $9.3 million for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively. Borrowings with the FHLB are considered short-term if they have an original maturity of less than a year. The Company has pledged a portion of its residential and commercial mortgage loan portfolio as collateral for these credit facilities. Principal balances outstanding on these pledged loans totaled approximately $241.9 million and $223.5 million at March 31, 2020 and December 31, 2019, respectively. In addition to the FHLB credit facility, in October 2015, the Company entered into a subordinated loan agreement for an aggregate principal amount of $2.0 million. Interest‑only payments are due quarterly at 6.71% per annum, and the outstanding principal balance matures in October 2025. In January 2018, the Company entered into a subordinated loan agreement for an aggregate principal amount of $4.5 million to fund the acquisition of Liberty Bell Bank, net of loan costs. Interest‑only payments are due quarterly at 6.875% per annum, and the outstanding principal balance matures in April 2028. Partners owns a one-half undivided interest in 410 William Street, Fredericksburg, Virginia. Partners purchased a one-half interest in the land for cash, plus additional settlement costs, and assumption of one-half of the remaining deed of trust loan on December 14, 2012. Partners indemnified the indemnities, who are the personal guarantors of the deed of trust loan in the amount of $886 thousand, which was one-half of the outstanding balance of the loan as of the purchase date. Partners has a remaining obligation under the note payable of $698 thousand as of March 31, 2020. The loan was refinanced on April 30, 2015 with a twenty-five year amortization. The interest rate is fixed at 3.60% for the first 10 years, and then becomes a variable rate of 3.0% plus the 10 year Treasury rate until maturity. The Company provides JMC a warehouse line of credit, which is eliminated in consolidation. In addition, JMC has a warehouse line of credit with another financial institution in the amount of $3.0 million. The interest rate is the weekly average of the one month LIBOR plus 2.250%, rounded to the nearest 0.125% (3.9% at March 31, 2020 and 4.0% at December 31, 2020). The rate is subject to change the first of every month. Amounts borrowed are collateralized by a security interest in the mortgage loans financed under the line and are payable upon demand. The warehouse line of credit is set to renew or mature on May 31, 2020. The balance outstanding at March 31, 2020 an December 31, 2019 was $444 thousand and $576 thousand, respectively. Interest expense on the warehouse lines of credit was $20 thousand during the three months ended March 31, 2020. The proceeds of these long‑term borrowings were generally used to purchase higher yielding investment securities, fund additional loans, redeem preferred stock, or fund acquisitions. Additionally, the Company has secured credit availability of $5.0 million with a correspondent bank and unsecured credit availability of $59.0 million with several other correspondent banks for short‑term liquidity needs, if necessary. The secured facility must be collateralized by specific securities at the time of any usage. At March 31, 2020 and December 31, 2019, there were no borrowings outstanding under these credit agreements. The Company has pledged investment securities available for sale with a combined amortized cost and fair value of $2.3 million with the FRB to secure Discount Window borrowings at March 31, 2020 and December 31, 2019. At March 31, 2020 and December 31, 2019 there were no outstanding borrowings under these facilities. Maturities on debt over the next five years are as follows (dollars in thousands): 2020 $ 47,138 2021 16,659 2022 5,659 2023 337 2024 20,030 |
Lease Commitments
Lease Commitments | 3 Months Ended |
Mar. 31, 2020 | |
Lease Commitments | |
Lease Commitments | Note 5. Lease Commitments The Company adopted ASU 2016-02, Leases (Topic 842) , on January 1, 2019, using a modified-retrospective approach, whereby comparative periods were not restated. No cumulative effect adjustment to the opening balance of retained earnings was required. The Company also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things allowed the Company to carry forward the historical lease classifications. Additionally, the Company elected the hindsight practical expedient to determine the lease term for existing leases. The Company leases eighteen locations for administrative offices and branch locations. Sixteen leases were classified as operating leases and two as finance leases. Leases with an initial term of 12 months or less as well as leases with a discounted present value of future cash flows below $25 thousand are not recorded on the balance sheet and the related lease expense is recognized over the lease term. The Company elected to use the practical expedient to not recognize short-term leases on the consolidated balance sheet and instead account for them as executory contracts. Certain leases include options to renew, with renewal terms that can extend the lease term, typically for five years. Lease assets and liabilities include related options that are reasonably certain of being exercised. The Company has determined that it will place a limit on exercises of available lease renewal options that would extend the lease term up to a maximum of fifteen years, including the initial term. The depreciable life of leased assets are limited by the expected lease term. Adoption of this standard resulted in the Company recognizing a right of use asset and a corresponding lease liability of $3.6 million on January 1, 2019. Supplemental lease information at or for the three months ended March 31, 2020 is as follows: Dollars in Thousands Balance Sheet Operating Lease Amounts Right-of-use asset classified as premises and equipment $ 4,308 Lease liability classified as other liabilities 4,609 Finance Lease Amounts Right-of-use asset classified as premises and equipment $ 1,927 Lease liability classified as other liabilities 2,327 Income Statement Operating lease cost classified as premises and equipment $ 234 Finance lease cost classified as borrowings 32 Weighted average lease term - Operating Leases (Yrs.) 8.25 Weighted average lease term - Finance Leases (Yrs.) 13.84 Weighted average discount rate - Operating Leases (1) 2.81 % Weighted average discount rate - Finance Leases (1) 2.84 % Operating outgoing cash flows from operating leases $ 222 Operating outgoing cash flows from finance leases $ 45 (1) The discount rate was developed by using the fixed rate credit advance borrowing rate at the FHLB of Atlanta for a term correlating to the remaining life of each lease. Management believes this rate closely mirrors its incremental borrowing rate for similar terms. A maturity analysis of the Company's lease liabilities at March 31, 2020 was as follows: Dollars in Thousands Operating Leases: One year or less $ 748 One to three years 1,222 Three to five years 1,124 Over 5 years 2,206 Total undiscounted cash flows 5,300 Less: Discount (691) Lease Liabilities $ 4,609 Finance Leases: One year or less $ 178 One to three years 357 Three to five years 387 Over 5 years 1,926 Total undiscounted cash flows 2,848 Less: Discount (521) Lease Liabilities $ 2,327 |
Stock Option Plans
Stock Option Plans | 3 Months Ended |
Mar. 31, 2020 | |
Stock Option Plans | |
Stock Option Plans | Note 6. Stock Option Plans Delmar Bancorp Stock Option Plan The Company had employee and director stock option plans and had reserved shares of stock for issuance thereunder. Options granted under these plans had a ten‑year life with a four‑year vesting period that began one year after date of grant, and were exercisable at a price equal to the fair value of the Company's stock on the date of the grant. Each award from all plans was evidenced by an award agreement that specifies the option price, the duration of the option, the number of shares to which the option pertains, and such other provisions as the grantor determines. The plan term ended in 2014, therefore no new options can be granted. All remaining stock options expired during the second quarter of 2019. Liberty Bell Bank Stock Option Plans In 2004, Liberty Bell Bank (“Liberty”) adopted the 2004 Incentive Stock Option Plan and the 2004 Non‑Qualified Stock Option Plan, which were stock‑based incentive compensation plans (the “Liberty Plans”). In February 2014, the Liberty Plans expired pursuant to their terms. Options under these plans had a 10 year life and vested over 5 years. Remaining options under the Liberty Plans became fully vested with the approval by the board of directors of Liberty signing the Agreement of Merger with the Company in July 2017 (the “Liberty Merger”). In accordance with the terms of the Agreement of Merger between the Company and Liberty, the Liberty Plans were assumed by the Company, and the options were converted into and became an option to purchase an adjusted number of shares of the common stock of Company at an adjusted exercise price per share. The number of shares was determined by multiplying the number of shares of Liberty common stock for which the option was exercisable by the number of shares of the Company’s common stock into which shares of Liberty common stock were convertible in the Liberty Merger, which was 0.2857 (the “Liberty Conversion Ratio”), rounded to the next lower whole share. The exercise price was determined by dividing the exercise price per share of Liberty common stock by the Liberty Conversion Ratio, rounded up to the nearest cent. At the effective time of the Liberty Merger there were 48,225 options outstanding at an exercise price of $1.18. These shares were converted to 13,771 options outstanding at an exercise price of $4.14. Remaining options for 8,709 shares were outstanding as follows: Employees Directors Average Average Shares Price Amount Shares Price Amount March 31, 2020 2,355 $ 4.14 $ 9,750 6,354 $ 4.14 $ 26,306 Virginia Partners Bank Stock Option Plan In 2015, Partners adopted the 2015 Stock Option Plan (the “2015 Partners Plan”), which allowed both incentive stock options and nonqualified stock options to be granted. The exercise price of each stock option equaled the market price of Partners' common stock on the date of grant and a stock option’s maximum term was 10 years. Stock options granted in the years ended December 31, 2018 and 2017 vested over 3 years. Partners previous stock compensation plan (the “2008 Partners Plan”) provided for the grant of share based awards in the form of incentive stock options and nonqualified stock options to Partners’ directors, officers and employees. In April 2015 the 2008 Partners Plan was terminated and replaced with the 2015 Partners Plan. Stock options outstanding prior to April 2015 were granted under the 2008 Partners Plan and became subject to the provisions of the 2015 Partners Plan. The 2008 Partners Plan also provided for stock options to be granted to seed investors as a reward for the contribution to organizational funds which were at risk if Partners’ organization had not been successful. Under the 2008 Partners Plan, Partners granted stock options to seed investors in 2008, which were fully vested upon the date of the grant. As a result of Delmar’s acquisition of Partners in November 2019 through an exchange of shares in an all-stock transaction, (the “Partners Share Exchange”), each stock option (the "Partners Options"), whether vested or unvested, issued and outstanding immediately prior to the effective time under the 2008 Partners Plan or the 2015 Partners Plan and together with the 2008 Partners Plan, (the "Partners Stock Plans"), immediately 100% vested, to the extent not already vested, and converted into and became stock options to purchase the Company’s common stock. In addition, the Company assumed each of the Partners Stock Plans, and assumed each Partners Option in accordance with the terms and conditions of the Partners Stock Plan pursuant to which it was issued. As such, Partners Options to acquire 149,200 shares of Partner’s common stock at a weighted average exercise price of $10.52 per share were converted into stock options to acquire 256,294 shares of the Company’s common stock at a weighted average exercise price of $6.13 per share. The number of shares was determined by multiplying the number of shares of Partners common stock for which the option was exercisable by the number of shares of the Company’s common stock into which shares of Partners common stock were convertible in the Partners Share Exchange, which was 1.7179 (the “Partners Conversion Ratio”), rounded to the next lower whole share. The exercise price was determined by dividing the exercise price per share of Partners common stock by the Partners Conversion Ratio, rounded up to the nearest cent. A summary of stock option transactions for the three month period ended March 31, 2020 is as follows: March 31, 2020 Weighted Weighted Average Average Remaining Exercise Contractual Intrinsic Shares Price Life Value Outstanding at beginning of period 247,705 $ Granted — — — Exercised (14,601) — Forfeited — — — Outstanding at end of period 233,104 $ $ (85,938) Options exercisable at March 31, 2020 233,104 $ Weighted average fair value of options granted during the period $ — The intrinsic value represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock options exceeds the exercise price) that would have been received by the holders had they exercised their stock options on March 31, 2020. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: March 31, 2020 Dividend yield % Expected life Expected volatility % Risk-free interest rate % The expected volatility is based on the Company’s recent historical volatility. The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on the contractual life and vesting period for the respective stock option. The dividend yield assumption is based on the Company’s expectation of dividend payouts. As stated in Note 1, the Company follows ASC 718‑10 which requires that stock‑based compensation to employees and directors be recognized as compensation cost in the income statement based on their fair values on the measurement date, which, for the Company, is the date of the grant. All stock option expenses had been fully recognized prior to 2019. |
Restricted Stock Plan
Restricted Stock Plan | 3 Months Ended |
Mar. 31, 2020 | |
Restricted Stock Plan | |
Restricted Stock Plan | Note 7. Restricted Stock Plan The Company had an employee and director restricted stock plan (the “Company Plan”) and reserved 405,805 shares of stock for issuance thereunder. The Company adopted the Company Plan, pursuant to which employee and directors of the Company could acquire shares of common stock. The Company Plan was adopted by the Company's Board of Directors in April 2014, and was subject to the right of the Board of Directors to terminate the Company Plan at any time. The Company Plan terminated at its scheduled date on June 30, 2018. The termination of the Company Plan, either at the scheduled termination date or before such date, did not affect any award issued prior to termination. As of March 31, 2020, non‑vested restricted stock awards totaling 3,000 were outstanding as follows: Employees Weighted Average Shares Fair Value Nonvested Awards December 31, 2019 6,000 $ 7.30 Vested in 2020 (3,000) 7.30 Nonvested Awards March 31, 2020 3,000 $ 7.30 As stated in Note 1, the Company follows ASC 718‑10 which requires that restricted stock‑based compensation to employees and directors be recognized as compensation cost in the income statement based on their fair values on the measurement date. The fair value of restricted stock granted is equal to the underlying fair value of the stock. As a result of applying the provisions of ASC 718‑10, during the three months ended March 31, 20 20 and 2019 the Company recognized restricted stock‑based compensation expense of $5 thousand , or $4 thousand net of tax, related to the 2014 restricted stock awards under the Company Plan. Unrecognized restricted stock‑based compensation expense related to 2014 restricted stock awards under the Company Plan totaled approximately $21 thousand at March 31, 2020. The remaining period over which this unrecognized expense is expected to be recognized is approximately two years. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Earnings Per Share | Note 8. Earnings Per Share Basic and diluted earnings per share are calculated as follows: Three Months Ended March 31, (Dollars in thousands, except per share data) 2020 2019 Net income $ 2,422 $ 1,398 Net (income) attributable to noncontrolling interest (16) — Net income applicable to basic earnings per common share 2,406 1,398 Weighted average shares outstanding 17,806 9,985 Basic earnings per share $ 0.135 $ 0.140 Effect of dilutive securities: Weighted average shares outstanding under options the Company Plan (1) — 18 Weighted average exercise price per share $ — $ 9.05 Assumed proceeds on exercise $ — $ 167 Average market value per share $ — $ 7.16 Weighted average shares outstanding under options the Liberty Plan 9 12 Weighted average exercise price per share $ 4.22 $ 3.98 Assumed proceeds on exercise $ 38 $ 46 Average market value per share $ 7.22 $ 7.16 Less: Treasury stock purchased with assumed proceeds from exercise 5 6 Weighted average shares outstanding under options the Partners Stock Plans 236 — Weighted average exercise price per share $ 5.83 $ — Assumed proceeds on exercise $ 1,374 $ — Average market value per share $ 7.22 $ — Less: Treasury stock purchased with assumed proceeds from exercise 190 — Weighted average shares outstanding under restricted stock plans (2) 6 9 Diluted weighted average shares and common stock equivalents 17,862 10,000 Diluted earnings per share $ 0.135 $ 0.140 (1) Options were excluded from the calculation of dilutive earnings per share because they are anti‑dilutive. (2) Includes vested shares not yet issued and nonvested shares as of March 30. |
Regulatory Capital Requirements
Regulatory Capital Requirements | 3 Months Ended |
Mar. 31, 2020 | |
Regulatory Capital Requirements | |
Regulatory Capital Requirements | Note 9. Regulatory Capital Requirements The Company and its Subsidiaries are subject to various regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its Subsidiaries must meet specific capital adequacy guidelines that involve quantitative measures of the Company’s and the Subsidiaries assets, liabilities, and certain off‑balance‑sheet items as calculated under regulatory accounting practices. The Company’s and its Subsidiaries’ capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and its Subsidiaries to maintain minimum amounts and ratios (as defined in the regulations) of total and Tier I capital to risk‑weighted assets, Tier I capital to average assets, and common equity Tier I capital to risk‑weighted assets. Management believes as of March 31, 2020 that the Company and its Subsidiaries meet all capital adequacy requirements to which they are subject. As of March 31, 2020, the most recent notification from the Federal Deposit Insurance Corporation (“FDIC”) categorized the Subsidiaries as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Subsidiaries must maintain minimum total risk‑based, Tier I risk‑based, Tier I leverage and common equity Tier I risk‑based ratios. There are no conditions or events since that notification that management believes have changed the Subsidiaries category. The Common Equity Tier I, Tier I and Total capital ratios are calculated by dividing the respective capital amounts by risk‑weighted assets. Risk‑weighted assets are calculated based on regulatory requirements and include total assets, with certain exclusions, allocated by risk weight category, and certain off‑balance‑sheet items, among other things. The Tier I leverage ratio is calculated by dividing Tier I capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things. When fully phased in on January 1, 2019, the Basel III Capital Rules required the Subsidiaries and the Company to maintain (i) a minimum ratio of Common Equity Tier I capital to risk‑weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% Common Equity Tier I capital ratio as that buffer is phased in, effectively resulting in a minimum ratio of Common Equity Tier I capital to risk‑weighted assets of at least 7.0% upon full implementation), (ii) a minimum ratio of Tier I capital to risk‑weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier I capital ratio as that buffer is phased in, effectively resulting in a minimum Tier I capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier I capital plus Tier 2 capital) to risk‑weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% Total capital ratio as that buffer is phased in, effectively resulting in a minimum Total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier I capital to average quarterly assets. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and was phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reached 2.5% on January 1, 2019). The Basel III Capital Rules also provide for a “countercyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to the Subsidiaries or the Company. The capital conservation buffer is designed to absorb losses during periods of economic stress and, as detailed above, effectively increases the minimum required risk‑weighted capital ratios. Banking institutions with a ratio of Common Equity Tier I capital to risk‑weighted assets below the effective minimum (4.5% plus the capital conservation buffer and, if applicable, the countercyclical capital buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. The following table presents actual and required capital ratios as of March 31, 2020 and December 31, 2019 for the Subsidiaries and Company under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of March 31, 2020 and December 31, 2019 based on the fully phased‑in provisions of the Basel III Capital Rules. Capital levels required to be considered well capitalized are based on prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules. A comparison of the Company's and Subidiaries’ capital amounts and ratios as of March 31, 2020 and December 31, 2019 with the minimum requirements are presented below. To Be Well Capitalized For Capital Under Prompt Adequacy Corrective Action In Thousands Actual Purposes Provisions Amount Ratio Amount Ratio Amount Ratio As of March 31, 2020 Total Capital Ratio (To Risk Weighted Assets) Delmar Bancorp $ 134,174 13.1 % $ 107,491 10.5 % $ — N/A The Bank of Delmarva 80,926 12.7 % 66,933 10.5 % 63,746 10.0 % Virginia Partners Bank 48,085 12.5 % 40,258 10.5 % 38,341 10.0 % Tier I Capital Ratio (To Risk Weighted Assets) Delmar Bancorp 119,590 11.7 % 87,016 8.5 % — N/A The Bank of Delmarva 73,431 11.5 % 54,184 8.5 % 50,997 8.0 % Virginia Partners Bank 47,496 12.4 % 32,590 8.5 % 30,673 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) Delmar Bancorp 119,590 11.7 % 71,660 7.0 % — N/A The Bank of Delmarva 73,431 11.5 % 44,622 7.0 % 41,435 6.5 % Virginia Partners Bank 47,496 12.4 % 26,839 7.0 % 24,922 6.5 % Tier I Leverage Ratio (To Average Assets) Delmar Bancorp 119,590 9.6 % 49,784 4.0 % — N/A The Bank of Delmarva 73,431 9.4 % 31,347 4.0 % 39,184 5.0 % Virginia Partners Bank 47,496 10.5 % 18,170 4.0 % 22,712 5.0 % As of December 31, 2019 Total Capital Ratio (To Risk Weighted Assets) Delmar Bancorp $ 131,443 13.1 % $ 105,140 10.5 % $ — N/A The Bank of Delmarva 79,080 12.7 % 65,132 10.5 % 62,030 10.0 % Virginia Partners Bank 47,122 12.5 % 39,676 10.5 % 37,787 10.0 % Tier I Capital Ratio (To Risk Weighted Assets) Delmar Bancorp 117,374 11.7 % 85,113 8.5 % — N/A The Bank of Delmarva 71,752 11.6 % 52,726 8.5 % 49,624 8.0 % Virginia Partners Bank 46,881 12.4 % 32,119 8.5 % 30,230 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) Delmar Bancorp 117,374 11.7 % 70,224 7.0 % — N/A The Bank of Delmarva 71,752 11.6 % 43,421 7.0 % 40,320 6.5 % Virginia Partners Bank 46,881 12.4 % 26,451 7.0 % 24,562 6.5 % Tier I Leverage Ratio (To Average Assets) Delmar Bancorp 117,374 11.9 % 39,331 4.0 % — N/A The Bank of Delmarva 71,752 9.1 % 31,520 4.0 % 39,399 5.0 % Virginia Partners Bank 46,881 10.4 % 18,093 4.0 % 22,616 5.0 % Banking regulations also limit the amount of dividends that may be paid without prior approval of the Company’s regulatory agencies. Regulatory approval is required to pay dividends, which exceed the Company’s net profits for the current year plus its retained net profits for the preceding two years. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Fair Values of Financial Instruments | |
Fair Values of Financial Instruments | Note 10. Fair Values of Financial Instruments The following table shows the estimated fair value and the related carrying value of the Company's financial instruments at March 31, 2020 and December 31, 2019. Items that are not financial instruments are not included. March 31, December 31, Dollars are in thousands 2020 2019 Estimated Estimated Carrying Fair Carrying Fair Amount Value Amount Value Financial assets: Cash and due from banks $ 29,882 $ 29,882 $ 36,295 $ 36,295 Interest bearing deposits 23,221 23,221 27,586 27,586 Federal funds sold 31,587 31,587 31,230 31,230 Securities: Available for sale 104,652 104,652 106,256 106,256 Loans, net of allowance for credit losses 1,012,560 1,005,188 990,239 976,636 Accrued interest receivable 3,302 3,302 3,138 3,138 Federal Home Loan Bank stock 4,959 4,959 5,180 5,180 Atlantic Central Bankers stock 131 131 131 131 Other investments 2,849 2,849 2,838 2,838 Financial liabilities: Deposits $ 1,020,724 $ 1,028,956 $ 1,006,781 $ 1,008,842 Accrued interest payable 584 584 572 572 FHLB advances, notes payable, and financing leases 98,950 103,966 105,021 109,260 Unrecognized financial instruments: Commitments to extend credit $ 185,758 $ 185,758 $ 184,376 $ 184,376 Standby letters of credit 5,362 5,362 4,045 4,045 For purposes of the above disclosures of estimated fair value, the following assumptions were used. Cash and cash equivalents: The estimated fair value for cash and due from banks, interest bearing deposits in other financial institutions, and federal funds sold is considered to approximate cost because of their short‑term nature. Investment securities: Estimated fair values are based on quoted market prices for actual or similar instruments or estimated using discounted cash flows. The discounts used are estimated using comparable market rates for similar types of instruments adjusted to be commensurate with the audit risk, overhead costs, and optionality of such investments. Loans: The estimated fair value for certain homogeneous categories of loans, such as residential mortgages, is based on the quoted market price for securities backed by similar loans, adjusted for differences in loan characteristics. The estimated fair value of other loans is determined by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Deposits: The estimated fair value of deposits with no stated maturity, such as noninterest‑bearing demand deposits, savings, NOW accounts and money market accounts, is equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair value of certificates of deposit is based on the rates currently offered for deposits of similar maturities and using a discounted cash flow analysis. The fair value estimates do not include the benefit that results from the low‑cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market. Borrowings: The fair value of long‑term fixed rate borrowings is estimated by discounting future cash flows using current interest rates currently offered for similar financial instruments. Unrecognized financial instruments: The fair value of unrecognized financial instruments would be estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the customers. Other assets and liabilities: Other assets and liabilities of the Company that are not defined as financial instruments are not included in the above disclosures, such as property and equipment. Also, non‑financial instruments typically not recognized in the financial statements nevertheless may have value but are not included in the above disclosures. These include, among other items, the estimated earnings power of core deposit accounts, the trained work force, customer goodwill, and similar items. The following table presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company's financial instruments not disclosed elsewhere as of March 31, 2020 and December 31, 2019. This table excludes financial instruments for which the carrying amount approximates fair value. Dollars are in thousands Fair Value Hierarchy Carrying Fair Amount Value Level 1 Level 2 Level 3 March 31, 2020 Financial assets: Loans, net of allowance for credit losses $ 1,012,560 $ 1,005,188 $ — $ — $ 1,005,188 Financial liabilities: Interest-bearing deposits $ 752,498 $ 760,730 $ — $ 760,730 $ — FHLB advances, notes payable, and financing leases 98,950 103,966 — 103,966 — December 31, 2019 Financial assets: Loans, net of allowance for credit losses $ 990,239 $ 976,636 $ — $ — $ 976,636 Financial liabilities: Interest bearing deposits $ 745,150 $ 747,211 $ — $ 747,211 $ — FHLB advances, notes payable, and financing leases 105,021 109,260 — 109,260 — |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | Note 11. Fair Value Measurements Effective January 1, 2008, the Company adopted ASC 820‑10 Fair Value Measurements and Disclosures (“ASC 820-10”) which provides a framework for measuring and disclosing fair value under generally accepted accounting principles. ASC Topic 820 requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for example, available for sale investments securities) or on a nonrecurring basis (for example, impaired loans). ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value Fair Value Hierarchy Level 1 — Quoted prices in active markets for identical assets or liabilities Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities) Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value of assets or liabilities) In determining the appropriate levels, the Company performs a detailed analysis of assets and liabilities that are subject to ASC Topic 820. The following table presents fair value measurements on a recurring basis as of March 31, 2020 and December 31, 2019: Fair Dollars are in thousands Level 1 Level 2 Level 3 Value March 31, 2020 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 5,966 $ — $ 5,966 Obligations of States and political subdivisions — 35,388 — 35,388 Mortgage-backed securities — 58,319 — 58,319 Subordinated debt investments — 3,013 — 3,013 Equity securities — 1,966 — 1,966 Total securities available for sale $ — $ 104,652 $ — $ 104,652 December 31, 2019 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 10,312 $ — $ 10,312 Obligations of States and political subdivisions — 34,558 — 34,558 Mortgage-backed securities — 56,421 — 56,421 Subordinated debt investments — 3,030 — 3,030 Equity securities — 1,935 — 1,935 Total securities available for sale $ — $ 106,256 $ — $ 106,256 Securities available for sale are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments, which are considered level 2 inputs. For these securities, management obtains fair value measurements from an independent pricing service. The Company may also be required, from time to time, to measure certain other financial and non‑financial assets and liabilities at fair value on a non‑recurring basis in accordance with U.S. GAAP. The following table presents all fair value measurements on a non‑recurring basis as of March 31, 2020 and December 31, 2019: Dollars are in thousands Fair March 31, 2020 Level 1 Level 2 Level 3 Value Impaired loans $ — $ — $ 22,176 $ 22,176 Loans held for sale — 5,190 — 5,190 OREO — 2,417 — 2,417 Total $ — $ 7,607 $ 22,176 $ 29,783 December 31, 2019 Impaired loans $ — $ — $ 19,493 $ 19,493 Loans held for sale — 3,555 — 3,555 OREO — 2,417 — 2,417 Total $ — $ 5,972 $ 19,493 $ 25,465 Measured on a Non‑Recurring Basis: Financial Assets and Liabilities The Company is predominantly a cash flow lender with real estate serving as collateral on a majority of loans. Loans which are deemed to be impaired financial assets are primarily valued on a nonrecurring basis at the fair values of the underlying real estate collateral. The Company determines such fair values from independent appraisals, which management considers level 3 inputs. Loans held for sale are loans originated by JMC for sale in the secondary market. Loans originated for sale by JMC are recorded at lower of cost or market. No market adjustments were required at March 31, 2020 and December 31, 2019; therefore, loans held for sale were carried at cost. Because of the short-term nature, the book value of these loans approximates fair value at March 31, 2020 and December 31, 2019. Non Financial Assets and Non Financial Liabilities The Company has no non‑financial assets and non‑financial liabilities measured at fair value on a recurring basis. Certain non‑financial assets and non‑financial liabilities typically measured at fair value on a non‑recurring basis include foreclosed assets (upon initial recognition or subsequent impairment), non‑financial assets and non‑financial liabilities measured at fair value in a goodwill impairment test, and intangible assets and other non‑financial long‑lived assets measured at fair value for impairment assessment. Foreclosed real estate values are adjusted to their fair values, resulting in an impairment charge, which is included in earnings for the period. Foreclosed real estate, which are considered to be non‑financial assets, have been valued using a market approach at the time they are recorded in OREO. The values were determined using current market prices of similar real estate assets, which the Company considers to be level 2 inputs. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 12. Goodwill and Intangible Assets The Company accounts for goodwill and other intangible assets in accordance with ASC 350. The Company records the excess of cost acquired entities over the fair value of identifiable tangible and intangible assets acquired, less liabilities assumed, as goodwill. The Company amortizes acquired intangible assets with definite useful economic lives over their useful economic lives. On a periodic basis, management assesses whether events or changes in circumstances indicate that the carrying amount of the intangible assets may be impaired. The Company does not amortize goodwill or any acquired intangible assets with an indefinite useful economic life, but reviews them for impairment on an annual basis, or when events or changes in circumstances indicate that the carrying amounts may be impaired. The Company has performed the required goodwill impairment test and has determined that goodwill was not impaired as of December 31, 2019. Goodwill: The Company acquired goodwill in the purchase of Partners (see Note 13 – Virginia Partners Bank Transaction for further information). The following table provides changes in goodwill for the three months ended March 31, 2020 and the year ended December 31, 2019: March 31, December 31, Dollars in Thousands 2020 2019 Balance at the beginning of the period $ 9,391 $ 5,237 Partners acquisition — 4,154 Impairment — — Balance at the end of the period $ 9,391 $ 9,391 Core Deposit Intangible: The Company acquired core deposit intangibles in the acquisitions of Liberty and Partners. For the core deposit intangible related to Liberty, the Company utilizes the double declining balance method of amortization, in which the straight line amortization rate is doubled and applied to the remaining unamortized portion of the intangible asset. The amortization method changes to the straight line method of amortization when the straight line amortization amount exceeds the amount that would be calculated under the double declining balance method. This core deposit intangible is being amortized over seven years. For the core deposit intangible related to Partners, the Company utilizes the sum of months method and an estimated average life of 120 months. The following table provides changes in the core deposit intangible for the three months ended March 31, 2020, and the year ended December 31, 2019: March 31, December 31, Dollars in Thousands 2020 2019 Balance at the beginning of the period $ 3,373 $ 1,069 Partners acquisition — 2,650 Accumulated amortization (183) (346) Balance at the end of the period $ 3,190 $ 3,373 The following table provides the amortization expense for the core deposit intangible over the years indicated below: March 31, Dollars in Thousands 2020 2020 $ 530 2021 600 2022 520 2023 467 2024 and thereafter 1,073 $ 3,190 Net Deposits Purchased Premium and Discount: The Company paid a deposit premium in the acquisition of Liberty and received a deposit discount in the acquisition of Partners, which are included in the balances of time deposits on the balance sheets. The premium amount is amortized as a reduction in interest expense over the life of the acquired time deposits and the discount is accreted as an increase in interest expense over the life of the acquired time deposits. The premium and discount on deposits will both be amortized and accreted over approximately five years. The following table provides changes in the net deposit discount for the three months ended March 31, 2020 and the year ended December 31, 2019: March 31, December 31, Dollars in Thousands 2020 2019 Balance at the beginning of the period $ (31) $ 27 Partners acquisition — (38) Accumulated amortization, net — (20) Balance at the end of the period $ (31) $ (31) The following table provides the accretion for the net deposit discount over the years indicated below: March 31, Dollars in Thousands 2020 2020 $ (8) 2021 (15) 2022 (6) 2023 (2) 2024 and thereafter — $ (31) |
Virginia Partners Transaction
Virginia Partners Transaction | 3 Months Ended |
Mar. 31, 2020 | |
Virginia Partners Bank | |
Business combination | |
Business Combination | Note 13. Virginia Partners Bank Transaction On November 15, 2019, the Company completed its share exchange with Partners, a Virginia chartered commercial bank. Partners stockholders received 1.7179 shares of the Company's common stock for each share of Partners common stock they owned as of the effective date of the share exchange. The aggregate consideration paid to Partners stockholders was $52.3 million. Additionally, $350 thousand was included as consideration for replacement stock option awards per the share exchange agreement and $2 thousand in cash in lieu of fractional shares. The results of Partners' operations are included in the Company's consolidated statements of income for the three months ended March 31, 2020 and the year ended December 31, 2019 for the period beginning after November 15, 2019, the date of the effectiveness of the share exchange. The acquisition resulted in three new branches, an operations center and administrative headquarters in Fredericksburg, Virginia, along with an additional branch office in La Plata, Maryland and a loan production office in Annapolis, Maryland. The acquisition of Partners was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration paid were recorded at their estimated fair values as of the acquisition date. The excess consideration paid over the fair value of net assets acquired has been reported as goodwill in the Company's consolidated statements of financial condition as of March 31, 2020 and December 31, 2019. The assets acquired and liabilities assumed in the acquisition of Partners were recorded at their estimated fair values based on management's best estimates using information available at the date of the acquisition and are subject to adjustment for up to one year after the closing date of the acquisition. The items most susceptible to adjustment are the credit fair value adjustments on loans, core deposit intangible and the deferred income tax assets resulting from the acquisition. In connection with the acquisition, the consideration paid and the fair value of identifiable assets acquired and liabilities assumed as of the date of acquisition are summarized in the following table: Estimated Fair Value as of Dollars in Thousands November 15, 2019 Consideration paid: Cash $ 2 Common stock issued in acquisition 52,282 Stock options issued in acquisition (replacement awards) 350 Total consideration paid $ 52,634 Assets acquired: Cash and cash equivalents 6,743 Investment securities 65,373 Investments in correspondent bank stock 3,670 Loans 357,127 Premises and equipment 6,969 Accrued interest receivable 1,155 Core deposit intangible 2,650 Deferred tax asset 1,239 Other assets 9,242 Total assets acquired $ 454,168 Liabilities assumed: Deposits $ 348,552 Other liabilities 56,408 Total liabilities assumed $ 404,960 Net assets acquired $ 49,208 Noncontrolling interest in consolidated subsidiaries $ 728 Goodwill recorded in acquisition $ 4,154 Acquired loans (impaired and nonimpaired) are initially recorded at their acquisition date fair values using Level 3 inputs. Fair values are based on a discounted cash flow methodology that involves assumptions and judgments as to credit risk, expected life time losses, environmental factors, collateral values, discount rates, expected payments and expected prepayments. Specifically, the Company has prepared three separate loan fair value adjustments that it believes a market participant might employ in estimating the entire fair value adjustment necessary under ASC 820-10 for the acquired loan portfolio. The three separate fair valuation methodologies employed are: (i) an interest rate loan fair value adjustment, (ii) a general credit fair value adjustment, and (iii) a specific credit fair value adjustment for PCI loans subject to ASC 310-30 provisions. The acquired loans were recorded at fair value at the acquisition date without carryover of Partners’ previously established allowance for loan losses. The fair value of the financial assets acquired included loans receivable with a principal balance, prior to fair value adjustments, of $362.9 million. The table below illustrates the fair value adjustments made to the amortized cost basis to present a fair value of the loans acquired: Dollars in Thousands At November 15, 2019 Gross principal balance $ 362,916 Fair value adjustment on pools of non-credit impaired loans (4,990) Fair value adjustment on purchased credit impaired loans (799) Fair value of acquired loans $ 357,127 The credit adjustment on acquired impaired loans is derived in accordance with ASC 310-30 and represents the portion of the loan balances that have been deemed uncollectible based on the Company's expectations of future cash flows for each respective loan: Dollars in Thousands At November 15, 2019 Contractually required principal and interest at acquisition $ 6,713 Contractual cashflows not expected to be collected (non-accretable discount) (1,371) Expected cash flows at acquisition 5,342 Interest component of expected cash flows (673) Fair value for loans acquired under ASC 310-30 $ 4,669 The fair value of savings and transaction deposit accounts acquired from Partners provide value to the Company as a source of below market rate funds. The fair value of the core deposit intangible was determined based on a discounted cash flow analysis using a discount rate based on the estimated cost of capital for a market participant. To calculate cash flows, the sum of deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the cost of alternative funding sources available to the Company. The expected cash flows of the deposit base included estimated attrition rates. The core deposit intangible was valued at $2.7 million or 1.01% of total deposits. The core deposit intangible asset is being amortized on the sum of months method over 10 years. Direct costs related to the merger were accrued and expensed as incurred. During the year ended December 31 2019, the Company incurred $1.9 million in Partners merger‑related expenses. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition | |
Revenue Recognition | Note 14. Revenue Recognition On January 1, 2018, the Company adopted ASU No. 2014-09 Revenue from Contracts with Customers (“Topic 606”) and all subsequent ASUs that modified Topic 606. The implementation of the new standard did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 606. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees and merchant income. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below. Service Charges on Deposit Accounts Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or at the end of the month through a direct charge to customers’ accounts. Mortgage Division Income Mortgage division income, which is included is noninterest income, consists of fees for loans originated by the Company through an application process that are sent to a mortgage broker. The loan application and underwriting processes are completed by other various financial institutions. The Company receives a pre-negotiated fee at settlement for initiating the loan origination. The Company receives the fee and recognizes the income when the loan goes to settlement. Other Noninterest Income Other noninterest income consists of: fees, exchange, other service charges, safety deposit box rental fees, and other miscellaneous revenue streams. Fees and other service charges are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 15. Recent Accounting Pronouncements Information about certain recently issued accounting standards updates is presented below. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).” The amendments in ASU 2016-13, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The FASB has issued multiple updates to ASU 2016-13 as codified in Topic 326, including ASU’s 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, and 2020-03. These ASU’s have provided for various minor technical corrections and improvements to the codification as well as other transition matters. Smaller reporting companies who file with the U.S. Securities and Exchange Commission (the “SEC”) and all other entities who do not file with the SEC are required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently evaluating the potential impact of ASU 2016‑13 on our consolidated financial statements. We are currently working through our implementation plan which includes assessment and documentation of processes, internal controls and data sources; model development and documentation; and systems configuration, among other things. We are also in the process of implementing a third‑party vendor solution to assist us in the application of ASU 2016‑13. The adoption of ASU 2016‑13 could result in an increase in the allowance for credit losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU 2016‑13 will necessitate that we establish an allowance for expected credit losses for certain debt securities and other financial assets. While we are currently unable to reasonably estimate the impact of adopting ASU 2016‑13, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date. Effective November 25, 2019, the SEC adopted Staff Accounting Bulletin (“SAB”) No. 119 (“SAB 119”). SAB 119 updated portions of SEC interpretative guidance to align with ASC 326, “Financial Instruments – Credit Losses .” It covers topics including (1) measuring current expected credit losses; (2) development, governance, and documentation of a systematic methodology; (3) documenting the results of a systematic methodology; and (4) validating a systematic methodology. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”).” ASU 2019-12 is expected to reduce cost and complexity related to the accounting for income taxes by removing specific exceptions to general principles in Topic 740 (eliminating the need for an organization to analyze whether certain exceptions apply in a given period) and improving financial statement preparers’ application of certain income tax-related guidance. ASU 2019-12 is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact that ASU 2019-12 will have on its consolidated financial statements. In January 2020, the FASB issued ASU 2020-01, “Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU 2020-01”).” ASU 2020-01 is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2020-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in ASU 2020-01 are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted . Management does not expect the adoption of ASU 2020-01 to have a material impact on its consolidated financial statements . In March 2020, the FASB issued ASU No. 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).” ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is assessing ASU 2020-04 and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments, and is currently evaluating the effect that ASU 2020-04 will have on the Company’s consolidated financial statements. On March 12, 2020, the SEC finalized amendments to the definitions of its “accelerated filer” and “large accelerated filer” definitions. The amendments increase the threshold criteria for meeting these filer classifications and are effective on April 27, 2020. Any changes in filer status are to be applied beginning with the filer’s first annual report filed with the SEC subsequent to the effective date. Prior to these changes, the Company had not been required to comply with section 404(b) of the Sarbanes Oxley Act of 2002 concerning auditor attestation over internal control over financial reporting (“ICFR”) as an “accelerated filer” as it had less than $75 million in public float. The rule change expands the definition of “smaller reporting companies” to include entities with public float of less than $700 million and less than $100 million in annual revenues. The Company will continue to be a smaller reporting company under the expanded definition. The classifications of “accelerated filer” and “large accelerated filer” require a public company to obtain an auditor attestation concerning the effectiveness of ICFR and include the opinion on ICFR in its annual report on Form 10-K. Smaller reporting companies also have additional time to file quarterly and annual financial statements. All public companies are required to obtain and file annual financial statement audits, as well as provide management’s assertion on effectiveness of internal control over financial reporting, but the external auditor attestation of internal control over financial reporting is not required for smaller reporting companies. This change does not affect the Company’s annual reporting and audit requirements . In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in the previous two-step impairment test. Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 eliminates the prior requirement to calculate a goodwill impairment charge using Step 2, which requires an entity to calculate any impairment charge by comparing the implied fair value of goodwill with its carrying amount. ASU 2017-04 was effective for the Company on January 1, 2020. Management does not believe the guidance had a significant impact on the Company’s financial positions, results of operations or disclosures. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements by requiring that Level 3 fair value disclosures include the range and weighted average of significant unobservable inputs used to develop those fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. Certain disclosure requirements in Topic 820 were also removed or modified. ASU 2018-13 was effective for the Company on January 1, 2020. Management does not believe that the adoption of ASU 2018‑13 had a material impact on the Company's consolidated financial statements. In March 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System and the FDIC, (“the Agencies”) issued an interagency statement on loan modifications and reporting for financial institutions working with customers affected by the coronavirus disease (“COVID-19”). The interagency statement was effective immediately and impacted accounting for loan modifications. Under ASC 310-40, “Receivables – Troubled Debt Restructurings by Creditors ,” (“ASC 310-40”), a restructuring of debt constitutes a TDR if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The Agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. Management expects this interagency guidance to have an impact on the Company’s financial statements; however, this impact cannot be quantified at this time. |
Nature of Business and Its Si_2
Nature of Business and Its Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Nature of Business and Its Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of the Company; the Subsidiaries, along with their consolidated subsidiaries: Delmarva Real Estate Holdings, LLC., a wholly owned subsidiary of Delmarva, which is a real estate holding company; Davie Circle, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; Delmarva BK Holdings, LLC, a wholly owned subsidiary of Delmarva, which is a real estate holding company; DHB Development, LLC, of which Delmarva holds a 40.55% interest, and is a real estate holding company; West Nithsdale Enterprises, LLC, of which Delmarva holds a 10% interest, and is a real estate holding company; and FBW, LLC, of which Delmarva holds 50% interest, and is a real estate holding company; Bear Holdings, Inc., a wholly owned subsidiary of Partners, and is a real estate holding company; Johnson Mortgage Company, LLC, of which Partners owns 51% interest, and is a residential mortgage company; and 410 William Street, LLC, a wholly owned subsidiary of Partners, and which holds investment property. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Financial Statement Presentation | Financial Statement Presentation: The unaudited interim consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations, changes in stockholder's equity, and cash flows in conformity with U.S. GAAP. In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position at March 31, 2020 and December 31, 2019, the results of its operations and its cash flows for the three months ended March 31, 2020 and 2019 in conformity with U.S. GAAP. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, or for any other period. |
Use of Estimates | Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Securities Available for Sale | Securities Available for Sale: Marketable debt and equity securities not classified as held to maturity are classified as available for sale. Securities available for sale are acquired as part of the Subsidiaries' asset/liability management strategy and may be sold in response to changes in interest rates, loan demand, changes in prepayment risk, and other factors. Securities available for sale are carried at fair value as determined by quoted market prices. Unrealized gains or losses based on the difference between amortized cost and fair value are reported in other comprehensive income, net of deferred tax. Realized gains and losses, using the specific identification method, are included as a separate component of other income (expense) and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. Additionally, declines in the fair value of individual investment securities below their cost that are other than temporary are reflected as realized losses in the consolidated statements of income. Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of recoverability, all relevant information is considered, including the length of time and extent to which fair value has been less than the amortized cost basis, the cause of the price decline, credit performance of the issuer and underlying collateral, and recoveries or further declines in fair value subsequent to the balance sheet date. For debt securities, the Company measures and recognizes other-than-temporary impairment (“OTTI”) losses through earnings if (1) the Company has the intent to sell the security or (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. In these circumstances, the impairment loss is equal to the full difference between the amortized cost basis and the fair value of the security. For securities that are considered OTTI that the Company has the intent and ability to hold in an unrealized loss position, the OTTI write-down is separated into an amount representing the credit loss, which is recognized in earnings, and the amount related to other factors, which is recognized as a component of other comprehensive income (“OCI”). For equity securities, the Company recognizes OTTI losses through earnings if the Company intends to sell the security. The Company also considers other relevant factors, including its intent and ability to retain the security for a period of time sufficient to allow for any anticipated recovery in market value, and whether evidence exists to support a realizable value equal to or greater than the carrying value. Any OTTI loss on an equity security is equal to the full difference between the amortized cost basis and the fair value of the security. |
Equity Securities | Equity Securities: Equity securities with readily determinable fair values are carried at fair value, with changes in fair value reported in net income. Any equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. The entirety of any impairment on equity securities is recognized in earnings. |
Other Securities | Other Securities: Federal Home Loan Bank (“FHLB”) stock, at cost, and Atlantic Central Bankers Bank (“ACBB”), at cost, Community Bankers Bank (“CBB”) and Maryland Financial Bank (“MFB”) are equity interests in the FHLB, ACBB, CBB and MFB, respectively. These securities do not have a readily determinable fair value for purposes of Accounting Standards Codification (“ASC”) 320‑10 Investments‑Debts and Equity Securities because their ownership is restricted and they lack an active market. As there is no readily determinable fair value for these securities, they are carried at cost less any OTTI. Other investments consists of an equity ownership of Solomon Hess SBA Loan Fund LLC which the value is adjusted for its prorata share of assets in the fund and investment in the stock of the Federal Reserve Bank (“FRB”). |
Bank Owned Life Insurance | Bank Owned Life Insurance: The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other changes or amounts due that are probable at settlement. |
Loans and the Allowance for Credit Losses | Loans and the Allowance for Credit Losses: Loans are generally carried at the amount of unpaid principal, adjusted for unearned loan fees, which are amortized over the term of the loan using the effective interest rate method. Interest on loans is accrued based on the principal amounts outstanding. It is the Subsidiaries' policy to discontinue the accrual of interest when a loan is specifically determined to be impaired or when principal or interest is delinquent for ninety days or more. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Cash collections on such loans are applied as reductions of the loan principal balance and no interest income is recognized on those loans until the principal balance has been collected. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. The carrying value of impaired loans is based on the present value of the loan's expected future cash flows or, alternatively, the observable market price of the loan or the fair value of the collateral. The allowance for credit losses is maintained at a level believed adequate by management to absorb probable losses inherent in the loan portfolio and is based on the size and current risk characteristics of the loan portfolio, an assessment of individual problem loans and actual loss experience, the value of the underlying collateral, and current economic events in specific industries and geographical areas, including unemployment levels, and other pertinent factors, including regulatory guidance and general economic conditions. Determination of the allowance is inherently subjective, as it requires significant estimates, including the amounts and timing on historical loss experience, and consideration of current economic trends, all of which may be susceptible to significant change. Loan losses are charged off against the allowance, while recoveries of amounts previously charged off are credited to the allowance. A provision for credit losses is charged to operations based on management's periodic evaluation of the factors previously mentioned, as well as other pertinent factors. Evaluations are conducted at least monthly and more often if deemed necessary. The allowance for credit losses typically consists of an allocated component and an unallocated component. The allocated component of the allowance for credit losses reflects expected losses resulting from analyses developed through specific credit allocations for individual loans and historical loss experience for each loan category. The specific credit allocations are based on regular analyses of all loans over a fixed‑dollar amount where the internal credit rating is at or below a predetermined classification. The historical loan loss element is determined statistically using an informal loss migration analysis that examines loss experience and the related internal gradings of loans charged off over a current three (3) year period. The loss migration analysis is performed quarterly and loss factors are updated regularly based on actual experience. The allocated component of the allowance for credit losses also includes consideration of concentrations and changes in portfolio mix and volume. Any unallocated portion of the allowance reflects management's estimate of probable inherent but undetected losses within the portfolio due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower's financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet manifested themselves in loss allocation factors. In addition, the unallocated allowance includes a component that explicitly accounts for the inherent imprecision in loan loss migration models. The historical losses used in the migration analysis may not be representative of actual unrealized losses inherent in the portfolio. It is management's intent to continually refine the methodology for the allowance for credit losses in an attempt to directly allocate potential losses in the loan portfolio under ASC Topic 310 and minimize the unallocated portion of the allowance for credit losses. Loan Charge‑off Policies Loans are generally fully or partially charged down to the fair value of securing collateral when: · management deems the asset to be uncollectible; · repayment is deemed to be made beyond the reasonable time frames; · the asset has been classified as a loss by internal or external review; and · the borrower has filed bankruptcy and the loss becomes evident owing to a lack of assets. Acquired Loans Loans acquired in connection with business combinations are recorded at their acquisition‑date fair value with no carry over of related allowance for credit losses. Any allowance for credit loss on these pools reflect only losses incurred after the acquisition (meaning the present value of all cash flows expected at acquisition that ultimately are not to be received). Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition‑date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment. Acquired loans that meet the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans, including the impact of any accretable yield. Loans acquired with deteriorated credit quality are accounted for in accordance with ASC 310‑30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310‑30) if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected. At acquisition, the Company considers several factors as indicator that an acquired loan has evidence of deterioration in credit quality. These factors include; loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non‑accrual by the acquired institution, and loans that have been previously modified in a troubled debt restructuring. Under the ASC 310‑30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable yield is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated (the accretion method). If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan's total scheduled principal and interest payment over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non‑accretable difference. The non‑accretable difference represents contractually required principal and interest payments which the Company does not expect to collect. Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for credit losses resulting in an increase in the allowance for credit losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowa,nces recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable yield to be subsequently recognized as interest income on a prospective basis over the loan's remaining life. Acquired loans that were not individually determined to be purchased with deteriorated credit quality are accounted for in accordance with ASC 310‑20, Nonrefundable Fees and Other Costs (ASC 310‑20), whereby the premium or discount derived from the fair market value adjustment, on a loan‑by‑loan or pooled basis, is recognized into interest income on a level yield basis over the remaining expected life of the loan or pool. Troubled Debt Restructurings A loan is accounted for and reported as a troubled debt restructuring (“TDR”) when, for economic or legal reasons, we grant a concession to a borrower experiencing financial difficulty that we would not otherwise consider. Management strives to identify borrowers in financial difficulty early and works with them to modify to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. A restructuring that results in only an insignificant delay in payment is not considered a concession. A delay may be considered insignificant if the payments subject to the delay are insignificant relative to the unpaid principal or collateral value and the contractual amount due, or the delay in timing of the restructured payment period is insignificant relative to the frequency of the payments, the debt’s original contractual maturity or original expected duration. TDRs are designated as impaired loans because interest and principal payments will not be received in accordance with the original contract terms. TDRs that are performing and on accrual status as of the date of the modification remain on accrual status. TDRs that are nonperforming as of the date of modification generally remain as nonaccrual until the prospect of future payments in accordance with the modified loan agreement is reasonably assured, generally demonstrated when the borrower maintains compliance with the restructured terms for a predetermined period, normally at least six months. TDRs with temporary below-market concessions remain designated as a TDR and impaired regardless of the accrual or performance status until the loan is paid off. However, if the TDR loan has been modified in a subsequent restructure with market terms and the borrower is not currently experiencing financial difficulty, then the loan may be no longer designated as a TDR. |
Loans Held for Sale | Loans Held for Sale: These loans consist of loans made through Partners’ majority owned subsidiary Johnson Mortgage Company, LLC (“JMC”). JMC is engaged in the mortgage brokerage business in which JMC originates, closes, and immediately sells mortgage loans and related servicing rights to permanent investors in the secondary market. JMC has written commitments from several permanent investors (large financial institutions) and only closes loans that meet the lending requirements of the permanent investors. Loans are made in connection with the purchase or refinancing of existing and new one-to-four family residences primarily in southeastern and northern Virginia. Loans are initially funded primarily by JMC’s lines of credit. With the concurrent sale and delivery of mortgage loans to the permanent investors, JMC records receivables for mortgage loans sold and recognizes the related gains and losses on such sales. The receivables for mortgage loans sold are usually satisfied within 30 days of sale, whereupon the related borrowings on the lines of credit are repaid. Because of the short holding period, these loans are carried at the lower of cost or market and no market adjustments were deemed necessary in the first quarter of 2020 or during 2019. JMC’s agreements with its permanent investors include provisions that could require JMC to repurchase loans under certain circumstances, and also provide for the assessment of fees if loans go into default or are refinanced within specified periods of time. JMC has never been required to repurchase a loan and no allowance has been made as of March 31, 2020 or December 31, 2019 for possible repurchases. Management does not believe that a provision for early default or refinancing costs is necessary at March 31, 2020 or December 31, 2019. JMC e,nters into commitments with its customers to originate loans where the interest rate on the loans is determined (locked) prior to funding. While this subjects JMC to the risk that interest rates may change from the commitment date to the funding date, JMC simultaneously enters into financial agreements (best efforts forward sales commitments) with its permanent investors giving JMC the right to deliver (put) loans to the investors at specified yields, thus enabling JMC to manage its exposure to changes in interest rates such that JMC is not subject to fluctuations in fair values of these agreements due to changes in interest rates. However, a default by a permanent investor required to purchase loans under such an agreement would expose JMC to potential fluctuation in selling prices of loans due to changes in interest rate. The fair value of rate lock commitments and forward sales commitments was considered immaterial at March 31, 2020 and December 31, 2019. Gains and losses on the sale of mortgages as well as origination fees, brokerage fees, interest rate lock-in fees and other fees paid by mortgagors are include in other income on the Company’s consolidated statements of income. |
Other Real Estate Owned (OREO) | Other Real Estate Owned (OREO): OREO comprises properties acquired in partial or total satisfaction of problem loans. The properties are recorded at the lower of cost or fair value at the date acquired. Losses arising at the time of acquisition of such properties are charged against the allowance for credit losses. Subsequent write‑downs that may be required and expenses of operation are included in other expenses. Gains and losses realized from the sale of OREO are included in other income. At March 31, 2020 and December 31, 2019 there were four properties with a combined estimated value of $ 2.4 million included in OREO. |
Intangible Assets and Amortization | Intangible Assets and Amortization: During the fourth quarter of 2019, the Company acquired Partners. ASC 350, Intangibles‑Goodwill and Other (ASC 350), prescribes accounting for intangible assets subsequent to initial recognition. Acquired intangible assets (such as core deposit intangibles) are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. Intangible assets related to the acquisition are amortized (See Note 12 – Goodwill and Intangible Assets for further information). |
Accounting for Stock Based Compensation | Accounting for Stock Based Compensation: The Company follows ASC 718‑10, Compensation—Stock Compensation (“ASC 718-10”) for accounting and reporting for stock‑based compensation plans. ASC 718‑10 defines a fair value at grant date to be used for measuring compensation expense for stock‑based compensation plans to be recognized in the statement of income. During 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2016‑10 Technical Corrections and Improvements, which replaced the definition of fair value previously used in ASC Topic 718 with the definition of fair value from ASC Topic 820, Fair Value Measurement (“ASC Topic 820”). The amendments affecting ASC 718‑10 were effective and applied prospectively by the Company beginning January 1, 2016. Management believes the resulting change in fair value measurement methodology is immaterial to the financial statements. |
Earnings Per Share | Earnings Per Share: Basic earnings per common share are determined by dividing net income adjusted for preferred stock dividends declared and/or accumulated and accretion of warrants by the weighted average number of shares outstanding for each period, giving retroactive effect to stock splits and dividends. Weighted average common shares outstanding were 17,805,714 and 9,985,321 for the three month periods ended March 31, 2020 and 2019, respectively. Calculations of diluted earnings per common share include the average dilutive common stock equivalents outstanding during the period, unless they are anti‑dilutive. Dilutive common equivalent shares consist of stock options calculated using the treasury stock method and restricted stock awards (See Note 8 – Earnings Per Share for further information). |
Investment Securities (Tables)
Investment Securities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investment Securities | |
Schedule of securities available for sale | March 31, 2020 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 5,761 $ 205 $ — $ 5,966 Obligations of States and political subdivisions 34,942 855 409 35,388 Mortgage-backed securities 57,113 1,239 33 58,319 Subordinated debt investments 2,988 68 43 3,013 Equity securities 1,966 — — 1,966 $ 102,770 $ 2,367 $ 485 $ 104,652 December 31, 2019 Dollars in Thousands Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of U.S. Government agencies and corporations $ 10,186 $ 162 $ 36 $ 10,312 Obligations of States and political subdivisions 33,885 716 43 34,558 Mortgage-backed securities 56,275 236 90 56,421 Subordinated debt investments 2,988 42 — 3,030 Equity securities 1,935 — — 1,935 $ 105,269 $ 1,156 $ 169 $ 106,256 |
Schedule of gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position | March 31, 2020 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ — $ — $ — $ — $ — $ — Obligations of States and political subdivisions 9,027 409 — — 9,027 409 Mortgage-backed securities 1,587 33 — — 1,587 33 Subordinated debt investments 952 43 — — 952 43 Total securities with unrealized losses $ 11,566 $ 485 $ — $ — $ 11,566 $ 485 December 31, 2019 Dollars in Thousands Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss Obligations of U.S. Government agencies and corporations $ 5,269 $ 34 $ 2,000 $ 2 $ 7,269 $ 36 Obligations of States and political subdivisions 4,669 43 — — 4,669 43 Mortgage-backed securities 11,600 32 4,489 58 16,089 90 Subordinated debt investments — — — — — — Total securities with unrealized losses $ 21,538 $ 109 $ 6,489 $ 60 $ 28,027 $ 169 |
Schedule of maturities, calls, or repricing of securities available for sale | March 31, 2020 Securities Available for Sale Dollars in Thousands Amortized Fair Cost Value Due in one year or less $ 1,250 $ 1,253 Due after one year through five years 1,862 1,890 Due after five years through ten years 19,210 19,518 Due after ten years or more 23,335 23,672 Mortgage-backed securities, due in monthly installments 57,113 58,319 $ 102,770 $ 104,652 |
Loans, Allowance for Credit L_2
Loans, Allowance for Credit Losses and Impaired Loans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Loans, Allowance for Credit Losses and Impaired Loans | |
Schedule of major categories of loans | (Dollars in thousands) At March 31, 2020 At December 31, 2019 Originated Loans Real Estate Mortgage Construction and land development $ 69,455 $ 59,236 Residential real estate 114,748 108,590 Nonresidential 347,059 325,916 Home equity loans 16,177 13,736 Commercial 61,952 52,838 Consumer and other loans 3,114 2,669 612,505 562,985 Acquired Loans Real Estate Mortgage Construction and land development $ 21,417 $ 26,034 Residential real estate 92,084 101,088 Nonresidential 211,435 222,075 Home equity loans 21,419 24,176 Commercial 58,964 60,675 Consumer and other loans 2,898 3,091 408,217 437,139 Total Loans Real Estate Mortgage Construction and land development $ 90,872 $ 85,270 Residential real estate 206,832 209,678 Nonresidential 558,494 547,991 Home equity loans 37,596 37,912 Commercial 120,916 113,513 Consumer and other loans 6,012 5,760 1,020,722 1,000,124 Less: Unamortized discounts on acquired loans (5,533) (6,136) Less: Allowance for credit losses (7,819) (7,304) $ 1,007,370 $ 986,684 |
Schedule of allowance for credit losses by loan category | Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at March 31, 2020 Individually evaluated for impairment: Balance in allowance $ — $ 181 $ 90 $ — $ 207 $ — $ — $ 478 Related loan balance 388 4,417 14,287 56 2,086 17 — 21,251 Collectively evaluated for impairment: Balance in allowance $ 718 $ 1,238 $ 4,253 $ 169 $ 678 $ 19 $ 266 $ 7,341 Related loan balance 90,106 202,064 540,973 37,373 117,485 5,937 — 993,938 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Balance at December 31, 2019 Individually evaluated for impairment: Balance in allowance $ — $ 216 $ 82 $ — $ 274 $ — $ — $ 572 Related loan balance 723 3,905 11,449 9 2,238 — — 18,324 Collectively evaluated for impairment: Balance in allowance $ 602 $ 1,164 $ 3,991 $ 142 $ 552 $ 14 $ 267 $ 6,732 Related loan balance 84,028 205,381 533,100 37,706 109,759 5,690 — 975,664 March 31, 2020 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Quarter Ended Beginning Balance $ 602 $ 1,380 $ 4,074 $ 142 $ 826 $ 14 $ 266 $ 7,304 Charge-offs — (25) (38) — (66) (41) — (170) Recoveries — 4 3 10 7 13 — 37 Provision 116 60 304 17 118 33 — 648 Ending Balance $ 718 $ 1,419 $ 4,343 $ 169 $ 885 $ 19 $ 266 $ 7,819 March 31, 2019 Real Estate Mortgage Construction and Land Residential Consumer Dollars in Thousands Development Real Estate Nonresidential Home Equity Commercial and Other Unallocated Total Quarter Ended Beginning Balance $ 647 $ 1,521 $ 3,629 $ 122 $ 641 $ 13 $ 490 $ 7,063 Charge-offs (11) — (191) (4) (98) (37) — (341) Recoveries 1 2 4 — 18 16 — 41 Provision (39) (14) 254 29 94 19 (43) 300 Ending Balance $ 598 $ 1,509 S 3,696 $ 147 $ 655 $ 11 $ 447 $ 7,063 |
Schedule of loans by risk rating | Real Estate Secured Construction & Land Residential Consumer & March 31, 2020 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Excellent $ — $ — $ 397 $ — $ 6,044 $ 107 $ 6,548 Superior — 134 3,580 122 2,071 — 5,907 Good 89,498 199,142 534,658 37,243 107,471 5,831 973,843 Fair 819 4,207 12,003 64 2,429 16 19,538 Marginal — — — — — — — Substandard 177 2,998 4,622 — 1,556 — 9,353 TOTAL $ 90,494 $ 206,481 $ 555,260 $ 37,429 $ 119,571 $ 5,954 $ 1,015,189 Non-Accrual $ 177 $ 1,508 $ 2,346 $ — $ 1,280 $ — $ 5,311 TDRs $ — $ 2,269 $ 7,437 $ — $ 1,207 $ — $ 10,913 Number of TDR accounts — 11 18 — 1 — 30 Breakdown of TDRs TDRs on Non-accrual $ — $ 866 $ 575 $ — $ 1,207 $ — $ 2,648 TDRs Past Due 30-89 days — 15 — — — — 15 Performing TDRs — 1,388 6,862 — — — 8,250 TOTAL $ — $ 2,269 $ 7,437 $ — $ 1,207 $ — $ 10,913 Total Non-performing TDR accounts $ — $ 881 $ 575 $ — $ 1,207 $ — $ 2,663 Number of non‑performing TDRs — 3 2 — 1 — 6 Real Estate Secured Construction & Land Residential Consumer & December 31, 2019 Development Real Estate Nonresidential Home Equity Commercial Other Total Dollars in Thousands Excellent $ — $ — $ 405 $ — $ 6,089 $ 111 $ 6,605 Superior — 139 3,652 122 1,818 1 5,732 Good 83,773 202,690 525,465 37,528 99,973 5,557 954,986 Fair 801 3,321 9,739 64 2,469 20 16,414 Marginal — — — — — — — Substandard 177 3,136 5,290 — 1,648 — 10,251 TOTAL $ 84,751 $ 209,286 $ 544,551 $ 37,714 $ 111,997 $ 5,689 $ 993,988 Non-Accrual $ 177 $ 1,620 $ 2,608 $ 5 $ 131 $ — $ 4,541 Troubled debt restructures $ — $ 2,323 $ 7,934 $ — $ 38 $ — $ 10,295 Number of TDR accounts — 12 20 — 1 — 33 Breakdown of TDRs TDRs on Non-accrual $ — $ 904 $ 926 $ — $ 38 $ — $ 1,868 TDRs Past Due 30-89 — — — — — — — Performing TDRs — 1,419 7,008 — — — 8,427 TOTAL $ — $ 2,323 $ 7,934 $ — $ 38 $ — $ 10,295 Total Non-performing TDR accounts $ — $ 904 $ 926 $ — $ 38 $ — $ 1,868 Number of non‑performing TDRs — 3 3 — 1 — 7 |
Schedule of aging analysis of the recorded investment of past due financing receivables | Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At March 31, 2020 Past Due* Past Due** Past Due*** Past Due Balance Receivables*** and Accruing Dollars in Thousands Real Estate Construction and land development $ — $ 40 $ 177 $ 217 $ 90,655 $ 90,872 $ — Residential real estate 2,008 155 915 3,078 203,754 206,832 293 Nonresidential 1,631 42 1,570 3,243 555,251 558,494 — Home equity loans 19 — — 19 37,577 37,596 — Commercial 247 — 1,280 1,527 119,389 120,916 — Consumer and other loans 6 — — 6 6,006 6,012 — TOTAL $ 3,911 $ 237 $ 3,942 $ 8,090 $ 1,012,632 $ 1,020,722 $ 293 * Includes $ 1.5 million of non‑accrual loans. ** Includes $ 155 thousand of non-accrual loans. *** Includes $3.6 million of non-accrual loans. Recorded Investment Greater than Total >90 Days 30 - 59 Days 60 - 89 Days 90 Days Total Current Financing Past Due At December 31, 2019 Past Due* Past Due** Past Due*** Past Due Balance Receivables*** and Accruing Dollars in Thousands Real Estate Construction and land development $ 424 $ — $ 177 $ 601 $ 84,669 $ 85,270 $ — Residential real estate 1,296 677 702 2,675 207,003 209,678 — Nonresidential 635 144 1,823 2,602 545,389 547,991 — Home equity loans — — — — 37,912 37,912 — Commercial 231 1,207 94 1,532 111,981 113,513 — Consumer and other loans 1 19 — 20 5,740 5,760 5 TOTAL $ 2,587 $ 2,047 $ 2,796 $ 7,430 $ 992,694 $ 1,000,124 $ 5 * Includes $95 6 thousand of non‑accrual loans. ** *** . |
Schedule of impaired loans | Unpaid Interest Average Recorded Principal Income Specific Recorded March 31, 2020 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 691 691 — 181 709 Nonresidential 2,411 2,449 69 90 2,433 Home equity loans — — — — — Commercial 1,207 1,207 11 207 1,240 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 4,309 $ 4,347 $ 80 $ 478 $ 4,382 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 388 $ 388 $ 3 $ — $ 556 Residential real estate 4,528 5,299 57 — 4,296 Nonresidential real estate 12,365 12,697 182 — 11,050 Home equity loans 56 56 1 — 32 Commercial 991 991 17 — 1,034 Consumer and other loans 17 17 — — 8 Total impaired loans with no specific reserve $ 18,345 $ 19,448 $ 260 $ — $ 16,976 TOTAL $ 22,654 $ 23,795 $ 340 $ 478 $ 21,358 Unpaid Interest Average Recorded Principal Income Specific Recorded December 31, 2019 Investment Balance Recognized Reserve Investment Dollars in Thousands Impaired loans with specific reserves: Real Estate Mortgage Construction and land development $ — $ — $ — $ — $ — Residential real estate 727 727 — 216 2,337 Nonresidential 2,456 2,456 260 82 2,866 Home equity loans — — — — — Commercial 1,274 1,274 53 274 659 Consumer and other loans — — — — — Total impaired loans with specific reserves $ 4,457 $ 4,457 $ 313 $ 572 $ 5,862 Impaired loans with no specific reserve: Real Estate Mortgage Construction and land development $ 723 $ 545 $ 34 $ — $ 471 Residential real estate 4,064 4,717 243 — 4,566 Nonresidential 9,734 9,266 909 — 11,181 Home equity loans 9 9 17 — 351 Commercial 1,078 1,078 87 — 1,441 Consumer and other loans — — — — — Total impaired loans with no specific reserve $ 15,608 $ 15,615 $ 1,290 $ — $ 18,010 TOTAL $ 20,065 $ 20,072 $ 1,603 $ 572 $ 23,872 |
Schedule of outstanding balance and carrying amount of acquired loans | Dollars in Thousands March 31, 2020 December 31, 2019 Accountable for under ASC 310-30 (PCI loans) Outstanding balance $ 6,123 $ 6,428 Carrying amount 5,134 5,373 Accountable for under ASC 310-20 (non-PCI loans) Outstanding balance $ 402,094 $ 430,711 Carrying amount 397,550 425,630 Total acquired loans Outstanding balance $ 408,217 $ 437,139 Carrying amount 402,684 431,003 |
Schedule of changes in accretable yield of acquired loans | Dollars in Thousands March 31, 2020 December 31, 2019 Balance at beginning of period $ 5,081 $ 745 Acquisitions — 4,990 Accretion (537) (654) Balance at end of period $ 4,544 $ 5,081 |
Credit Facilities (Tables)
Credit Facilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Credit Facilities | |
Schedule of advances outstanding with the Federal Home Loan Bank and outstanding lines of credit | March 31, 2020 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate hybrid 12,000 1.31 April 2020 Fixed, at maturity Fixed rate hybrid 6,000 0.30 April 2020 Fixed, at maturity Fixed rate hybrid 3,200 0.30 April 2020 Fixed, at maturity Fixed rate hybrid 15,000 2.09 % June 2020 Fixed, paid monthly Fixed rate hybrid 5,000 3.04 % November 2020 Fixed, paid monthly Fixed rate hybrid 5,000 2.91 % November 2020 Fixed, paid quarterly Fixed rate hybrid 6,000 2.44 % April 2021 Fixed, paid quarterly Convertible* 10,000 2.68 % May 2021 Fixed, paid quarterly Fixed rate hybrid 5,000 3.15 % October 2022 Fixed, paid quarterly Principal reducing credit 1,286 1.62 % March 2023 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Fixed rate hybrid 9,900 1.29 % March 2024 Fixed, paid quarterly Principal reducing credit 1,380 1.99 % March 2026 Fixed, paid quarterly Total advances 89,666 December 31, 2019 Dollars in Thousands Outstanding Balance Interest Rate Maturity Date Interest Payment Fixed rate 12,000 1.73 % January 2020 Fixed, at maturity Fixed rate 4,500 1.76 % January 2020 Fixed, at maturity Fixed rate 7,600 1.68 % January 2020 Fixed, at maturity Fixed rate 7,700 1.68 % January 2020 Fixed, at maturity Fixed rate 6,000 1.70 % January 2020 Fixed, at maturity Fixed rate 3,200 1.71 % January 2020 Fixed, at maturity Fixed rate 7,000 1.70 % January 2020 Fixed, at maturity Fixed rate hybrid 15,000 1.51 % June 2019 Fixed, paid monthly Fixed rate hybrid 5,000 3.04 % November 2020 Fixed, paid monthly Fixed rate hybrid 5,000 2.91 % November 2020 Fixed, paid quarterly Fixed rate hybrid 6,000 2.44 % April 2021 Fixed, paid quarterly Convertible** 10,000 2.68 % May 2021 Fixed, paid quarterly Fixed rate hybrid 5,000 3.15 % October 2022 Fixed, paid quarterly Principal reducing credit 1,393 1.62 % March 2023 Fixed, paid quarterly Principal reducing credit 1,437 1.99 % March 2026 Fixed, paid quarterly Total advances 96,830 * The FHLB has the option of converting the rate on this long-term borrowing to a three month LIBOR-based floating rate in May 2020. |
Schedule of maturities of debt | 2020 $ 47,138 2021 16,659 2022 5,659 2023 337 2024 20,030 |
Lease Commitment (Tables)
Lease Commitment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Lease Commitments | |
Schedule of supplemental lease information | Supplemental lease information at or for the three months ended March 31, 2020 is as follows: Dollars in Thousands Balance Sheet Operating Lease Amounts Right-of-use asset classified as premises and equipment $ 4,308 Lease liability classified as other liabilities 4,609 Finance Lease Amounts Right-of-use asset classified as premises and equipment $ 1,927 Lease liability classified as other liabilities 2,327 Income Statement Operating lease cost classified as premises and equipment $ 234 Finance lease cost classified as borrowings 32 Weighted average lease term - Operating Leases (Yrs.) 8.25 Weighted average lease term - Finance Leases (Yrs.) 13.84 Weighted average discount rate - Operating Leases (1) 2.81 % Weighted average discount rate - Finance Leases (1) 2.84 % Operating outgoing cash flows from operating leases $ 222 Operating outgoing cash flows from finance leases $ 45 (1) The discount rate was developed by using the fixed rate credit advance borrowing rate at the FHLB of Atlanta for a term correlating to the remaining life of each lease. Management believes this rate closely mirrors its incremental borrowing rate for similar terms. |
Schedule of maturities of lease liabilities | (1) A maturity analysis of the Company's lease liabilities at March 31, 2020 was as follows: Dollars in Thousands Operating Leases: One year or less $ 748 One to three years 1,222 Three to five years 1,124 Over 5 years 2,206 Total undiscounted cash flows 5,300 Less: Discount (691) Lease Liabilities $ 4,609 Finance Leases: One year or less $ 178 One to three years 357 Three to five years 387 Over 5 years 1,926 Total undiscounted cash flows 2,848 Less: Discount (521) Lease Liabilities $ 2,327 |
Stock Option Plans (Tables)
Stock Option Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stock options | |
Schedule of stock option valuation assumptions | March 31, 2020 Dividend yield % Expected life Expected volatility % Risk-free interest rate % |
Stock options | Liberty 2004 Stock Option Plan | |
Stock options | |
Summary of stock option activity | Employees Directors Average Average Shares Price Amount Shares Price Amount March 31, 2020 2,355 $ 4.14 $ 9,750 6,354 $ 4.14 $ 26,306 |
Stock options | Virginia Partners Stock Option Plan | |
Stock options | |
Summary of stock option activity | March 31, 2020 Weighted Weighted Average Average Remaining Exercise Contractual Intrinsic Shares Price Life Value Outstanding at beginning of period 247,705 $ Granted — — — Exercised (14,601) — Forfeited — — — Outstanding at end of period 233,104 $ $ (85,938) Options exercisable at March 31, 2020 233,104 $ Weighted average fair value of options granted during the period $ — |
Restricted Stock Plan (Tables)
Restricted Stock Plan (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restricted Stock Plan | |
Summary of non vested restricted stock awards | Employees Weighted Average Shares Fair Value Nonvested Awards December 31, 2019 6,000 $ 7.30 Vested in 2020 (3,000) 7.30 Nonvested Awards March 31, 2020 3,000 $ 7.30 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Summary of diluted earnings per share | Three Months Ended March 31, (Dollars in thousands, except per share data) 2020 2019 Net income $ 2,422 $ 1,398 Net (income) attributable to noncontrolling interest (16) — Net income applicable to basic earnings per common share 2,406 1,398 Weighted average shares outstanding 17,806 9,985 Basic earnings per share $ 0.135 $ 0.140 Effect of dilutive securities: Weighted average shares outstanding under options the Company Plan (1) — 18 Weighted average exercise price per share $ — $ 9.05 Assumed proceeds on exercise $ — $ 167 Average market value per share $ — $ 7.16 Weighted average shares outstanding under options the Liberty Plan 9 12 Weighted average exercise price per share $ 4.22 $ 3.98 Assumed proceeds on exercise $ 38 $ 46 Average market value per share $ 7.22 $ 7.16 Less: Treasury stock purchased with assumed proceeds from exercise 5 6 Weighted average shares outstanding under options the Partners Stock Plans 236 — Weighted average exercise price per share $ 5.83 $ — Assumed proceeds on exercise $ 1,374 $ — Average market value per share $ 7.22 $ — Less: Treasury stock purchased with assumed proceeds from exercise 190 — Weighted average shares outstanding under restricted stock plans (2) 6 9 Diluted weighted average shares and common stock equivalents 17,862 10,000 Diluted earnings per share $ 0.135 $ 0.140 (1) Options were excluded from the calculation of dilutive earnings per share because they are anti‑dilutive. Includes vested shares not yet issued and nonvested shares as of March 30. |
Regulatory Capital Requiremen_2
Regulatory Capital Requirements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Regulatory Capital Requirements | |
Summary of comparison of the Company’s and the Bank’s capital amounts and ratios with the minimum requirements | To Be Well Capitalized For Capital Under Prompt Adequacy Corrective Action In Thousands Actual Purposes Provisions Amount Ratio Amount Ratio Amount Ratio As of March 31, 2020 Total Capital Ratio (To Risk Weighted Assets) Delmar Bancorp $ 134,174 13.1 % $ 107,491 10.5 % $ — N/A The Bank of Delmarva 80,926 12.7 % 66,933 10.5 % 63,746 10.0 % Virginia Partners Bank 48,085 12.5 % 40,258 10.5 % 38,341 10.0 % Tier I Capital Ratio (To Risk Weighted Assets) Delmar Bancorp 119,590 11.7 % 87,016 8.5 % — N/A The Bank of Delmarva 73,431 11.5 % 54,184 8.5 % 50,997 8.0 % Virginia Partners Bank 47,496 12.4 % 32,590 8.5 % 30,673 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) Delmar Bancorp 119,590 11.7 % 71,660 7.0 % — N/A The Bank of Delmarva 73,431 11.5 % 44,622 7.0 % 41,435 6.5 % Virginia Partners Bank 47,496 12.4 % 26,839 7.0 % 24,922 6.5 % Tier I Leverage Ratio (To Average Assets) Delmar Bancorp 119,590 9.6 % 49,784 4.0 % — N/A The Bank of Delmarva 73,431 9.4 % 31,347 4.0 % 39,184 5.0 % Virginia Partners Bank 47,496 10.5 % 18,170 4.0 % 22,712 5.0 % As of December 31, 2019 Total Capital Ratio (To Risk Weighted Assets) Delmar Bancorp $ 131,443 13.1 % $ 105,140 10.5 % $ — N/A The Bank of Delmarva 79,080 12.7 % 65,132 10.5 % 62,030 10.0 % Virginia Partners Bank 47,122 12.5 % 39,676 10.5 % 37,787 10.0 % Tier I Capital Ratio (To Risk Weighted Assets) Delmar Bancorp 117,374 11.7 % 85,113 8.5 % — N/A The Bank of Delmarva 71,752 11.6 % 52,726 8.5 % 49,624 8.0 % Virginia Partners Bank 46,881 12.4 % 32,119 8.5 % 30,230 8.0 % Common Equity Tier I Ratio (To Risk Weighted Assets) Delmar Bancorp 117,374 11.7 % 70,224 7.0 % — N/A The Bank of Delmarva 71,752 11.6 % 43,421 7.0 % 40,320 6.5 % Virginia Partners Bank 46,881 12.4 % 26,451 7.0 % 24,562 6.5 % Tier I Leverage Ratio (To Average Assets) Delmar Bancorp 117,374 11.9 % 39,331 4.0 % — N/A The Bank of Delmarva 71,752 9.1 % 31,520 4.0 % 39,399 5.0 % Virginia Partners Bank 46,881 10.4 % 18,093 4.0 % 22,616 5.0 % |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Values of Financial Instruments | |
Summary of the estimated fair value and the related carrying values of the Company’s financial instruments | March 31, December 31, Dollars are in thousands 2020 2019 Estimated Estimated Carrying Fair Carrying Fair Amount Value Amount Value Financial assets: Cash and due from banks $ 29,882 $ 29,882 $ 36,295 $ 36,295 Interest bearing deposits 23,221 23,221 27,586 27,586 Federal funds sold 31,587 31,587 31,230 31,230 Securities: Available for sale 104,652 104,652 106,256 106,256 Loans, net of allowance for credit losses 1,012,560 1,005,188 990,239 976,636 Accrued interest receivable 3,302 3,302 3,138 3,138 Federal Home Loan Bank stock 4,959 4,959 5,180 5,180 Atlantic Central Bankers stock 131 131 131 131 Other investments 2,849 2,849 2,838 2,838 Financial liabilities: Deposits $ 1,020,724 $ 1,028,956 $ 1,006,781 $ 1,008,842 Accrued interest payable 584 584 572 572 FHLB advances, notes payable, and financing leases 98,950 103,966 105,021 109,260 Unrecognized financial instruments: Commitments to extend credit $ 185,758 $ 185,758 $ 184,376 $ 184,376 Standby letters of credit 5,362 5,362 4,045 4,045 |
Summary of carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments not disclosed elsewhere | Dollars are in thousands Fair Value Hierarchy Carrying Fair Amount Value Level 1 Level 2 Level 3 March 31, 2020 Financial assets: Loans, net of allowance for credit losses $ 1,012,560 $ 1,005,188 $ — $ — $ 1,005,188 Financial liabilities: Interest-bearing deposits $ 752,498 $ 760,730 $ — $ 760,730 $ — FHLB advances, notes payable, and financing leases 98,950 103,966 — 103,966 — December 31, 2019 Financial assets: Loans, net of allowance for credit losses $ 990,239 $ 976,636 $ — $ — $ 976,636 Financial liabilities: Interest bearing deposits $ 745,150 $ 747,211 $ — $ 747,211 $ — FHLB advances, notes payable, and financing leases 105,021 109,260 — 109,260 — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Summary of fair value measurements on a recurring basis | Fair Dollars are in thousands Level 1 Level 2 Level 3 Value March 31, 2020 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 5,966 $ — $ 5,966 Obligations of States and political subdivisions — 35,388 — 35,388 Mortgage-backed securities — 58,319 — 58,319 Subordinated debt investments — 3,013 — 3,013 Equity securities — 1,966 — 1,966 Total securities available for sale $ — $ 104,652 $ — $ 104,652 December 31, 2019 Securities available for sale: Obligations of U.S. Government agencies and corporations $ — $ 10,312 $ — $ 10,312 Obligations of States and political subdivisions — 34,558 — 34,558 Mortgage-backed securities — 56,421 — 56,421 Subordinated debt investments — 3,030 — 3,030 Equity securities — 1,935 — 1,935 Total securities available for sale $ — $ 106,256 $ — $ 106,256 |
Summary of fair value measurements on a non-recurring basis | Dollars are in thousands Fair March 31, 2020 Level 1 Level 2 Level 3 Value Impaired loans $ — $ — $ 22,176 $ 22,176 Loans held for sale — 5,190 — 5,190 OREO — 2,417 — 2,417 Total $ — $ 7,607 $ 22,176 $ 29,783 December 31, 2019 Impaired loans $ — $ — $ 19,493 $ 19,493 Loans held for sale — 3,555 — 3,555 OREO — 2,417 — 2,417 Total $ — $ 5,972 $ 19,493 $ 25,465 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Intangible assets | |
Schedule of changes in carrying amount of goodwill | March 31, December 31, Dollars in Thousands 2020 2019 Balance at the beginning of the period $ 9,391 $ 5,237 Partners acquisition — 4,154 Impairment — — Balance at the end of the period $ 9,391 $ 9,391 |
Schedule of future amortization | March 31, Dollars in Thousands 2020 2020 $ 530 2021 600 2022 520 2023 467 2024 and thereafter 1,073 $ 3,190 |
Core deposit intangible | |
Intangible assets | |
Summary of changes in the intangible assets | March 31, December 31, Dollars in Thousands 2020 2019 Balance at the beginning of the period $ 3,373 $ 1,069 Partners acquisition — 2,650 Accumulated amortization (183) (346) Balance at the end of the period $ 3,190 $ 3,373 |
Deposits Purchased Premium (Discount) Net | |
Intangible assets | |
Summary of changes in the intangible assets | March 31, December 31, Dollars in Thousands 2020 2019 Balance at the beginning of the period $ (31) $ 27 Partners acquisition — (38) Accumulated amortization, net — (20) Balance at the end of the period $ (31) $ (31) |
Schedule of future accretion | March 31, Dollars in Thousands 2020 2020 $ (8) 2021 (15) 2022 (6) 2023 (2) 2024 and thereafter — $ (31) |
Virginia Partners Transaction (
Virginia Partners Transaction (Tables) - Virginia Partners Bank | 3 Months Ended |
Mar. 31, 2020 | |
Business Acquisition [Line Items] | |
Summary of consideration paid and the fair value of identifiable assets acquired and liabilities assumed as of the date of acquisition | Estimated Fair Value as of Dollars in Thousands November 15, 2019 Consideration paid: Cash $ 2 Common stock issued in acquisition 52,282 Stock options issued in acquisition (replacement awards) 350 Total consideration paid $ 52,634 Assets acquired: Cash and cash equivalents 6,743 Investment securities 65,373 Investments in correspondent bank stock 3,670 Loans 357,127 Premises and equipment 6,969 Accrued interest receivable 1,155 Core deposit intangible 2,650 Deferred tax asset 1,239 Other assets 9,242 Total assets acquired $ 454,168 Liabilities assumed: Deposits $ 348,552 Other liabilities 56,408 Total liabilities assumed $ 404,960 Net assets acquired $ 49,208 Noncontrolling interest in consolidated subsidiaries $ 728 Goodwill recorded in acquisition $ 4,154 |
Summary of fair value adjustments made to the amortized cost basis to present a fair value of the loans acquired | Dollars in Thousands At November 15, 2019 Gross principal balance $ 362,916 Fair value adjustment on pools of non-credit impaired loans (4,990) Fair value adjustment on purchased credit impaired loans (799) Fair value of acquired loans $ 357,127 |
Summary of portion of the loan balances that have been deemed uncollectible based on the Company’s expectations of future cash flows for each respective loan | Dollars in Thousands At November 15, 2019 Contractually required principal and interest at acquisition $ 6,713 Contractual cashflows not expected to be collected (non-accretable discount) (1,371) Expected cash flows at acquisition 5,342 Interest component of expected cash flows (673) Fair value for loans acquired under ASC 310-30 $ 4,669 |
Nature of Business and Its Si_3
Nature of Business and Its Significant Accounting Policies - Consolidation (Details) | 3 Months Ended |
Mar. 31, 2020subsidiary | |
Principles of Consolidation | |
Number of subsidiaries | 2 |
The Bank of Delmarva | DHB Development LLC | |
Principles of Consolidation | |
Ownership interest (as a percent) | 40.55% |
The Bank of Delmarva | West Nithsdale Enterprises LLC | |
Principles of Consolidation | |
Ownership interest (as a percent) | 10.00% |
The Bank of Delmarva | FBW LLC | |
Principles of Consolidation | |
Ownership interest (as a percent) | 50.00% |
Virginia Partners Bank | Johnson Mortgage Company LLC | |
Principles of Consolidation | |
Ownership interest (as a percent) | 51.00% |
Nature of Business and Its Si_4
Nature of Business and Its Significant Accounting Policies - Loans Held for Sale (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Loans held for sale | |||
Provisions for credit losses | $ 648 | $ 300 | |
Johnson Mortgage Company LLC | Real Estate | |||
Loans held for sale | |||
Receivable settlement period on mortgage loans sold | 30 days | ||
Allowance for repurchase of loans sold | $ 0 | $ 0 | |
Provisions for credit losses | $ 0 | $ 0 | |
Johnson Mortgage Company LLC | Real Estate | Minimum | |||
Loans held for sale | |||
Number of family residences in structures for which mortgages are purchased or refinanced | item | 1 | ||
Johnson Mortgage Company LLC | Real Estate | Maximum | |||
Loans held for sale | |||
Number of family residences in structures for which mortgages are purchased or refinanced | item | 4 |
Nature of Business and Its Si_5
Nature of Business and Its Significant Accounting Policies - OREO (Details) $ in Thousands | Mar. 31, 2020USD ($)property | Dec. 31, 2019USD ($)property |
Nature of Business and Its Significant Accounting Policies | ||
Number of properties | property | 4 | 4 |
Other real estate owned | $ | $ 2,417 | $ 2,417 |
Nature of Business and Its Si_6
Nature of Business and Its Significant Accounting Policies - Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Weighted average shares outstanding | ||
Weighted average shares outstanding | 17,805,714 | 9,985,321 |
Investment Securities - Availab
Investment Securities - Available for sale (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Marketable securities | ||
Amortized Cost | $ 102,770 | $ 105,269 |
Gross Unrealized Gains | 2,367 | 1,156 |
Gross Unrealized Losses | 485 | 169 |
Fair Value | 104,652 | 106,256 |
Obligations of U.S. Government agencies | ||
Debt securities | ||
Amortized Cost | 5,761 | 10,186 |
Gross Unrealized Gains | 205 | 162 |
Gross Unrealized Losses | 36 | |
Fair Value | 5,966 | 10,312 |
Obligations of States and political subdivisions | ||
Debt securities | ||
Amortized Cost | 34,942 | 33,885 |
Gross Unrealized Gains | 855 | 716 |
Gross Unrealized Losses | 409 | 43 |
Fair Value | 35,388 | 34,558 |
Mortgage-backed securities | ||
Debt securities | ||
Amortized Cost | 57,113 | 56,275 |
Gross Unrealized Gains | 1,239 | 236 |
Gross Unrealized Losses | 33 | 90 |
Fair Value | 58,319 | 56,421 |
Subordinated debt investments | ||
Debt securities | ||
Amortized Cost | 2,988 | 2,988 |
Gross Unrealized Gains | 68 | 42 |
Gross Unrealized Losses | 43 | |
Fair Value | 3,013 | 3,030 |
Equity securities | ||
Equity securities | ||
Amortized Cost | 1,966 | 1,935 |
Fair Value | $ 1,966 | $ 1,935 |
Investment Securities - Unreali
Investment Securities - Unrealized loss positions (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Marketable securities - Fair Value | ||
Less than 12 months | $ 11,566 | $ 21,538 |
12 months or more | 6,489 | |
Total | 11,566 | 28,027 |
Marketable securities - Unrealized Loss | ||
Less than 12 months | 485 | 109 |
12 months or more | 60 | |
Total | 485 | 169 |
Obligations of U.S. Government agencies | ||
Debt securities - Fair Value | ||
Less than 12 months | 5,269 | |
12 months or more | 2,000 | |
Total | 7,269 | |
Debt securities - Unrealized Loss | ||
Less than 12 months | 34 | |
12 months or more | 2 | |
Total | 36 | |
Obligations of States and political subdivisions | ||
Debt securities - Fair Value | ||
Less than 12 months | 9,027 | 4,669 |
Total | 9,027 | 4,669 |
Debt securities - Unrealized Loss | ||
Less than 12 months | 409 | 43 |
Total | 409 | 43 |
Mortgage-backed securities | ||
Debt securities - Fair Value | ||
Less than 12 months | 1,587 | 11,600 |
12 months or more | 4,489 | |
Total | 1,587 | 16,089 |
Debt securities - Unrealized Loss | ||
Less than 12 months | 33 | 32 |
12 months or more | 58 | |
Total | 33 | $ 90 |
Subordinated debt investments | ||
Debt securities - Fair Value | ||
Less than 12 months | 952 | |
Total | 952 | |
Debt securities - Unrealized Loss | ||
Less than 12 months | 43 | |
Total | $ 43 |
Investment Securities - Maturit
Investment Securities - Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Due in one year or less | $ 1,250 | |
Due after one year through five years | 1,862 | |
Due after five years through ten years | 19,210 | |
Due after ten years or more | 23,335 | |
Mortgage-backed, due in monthly installments | 57,113 | |
Amortized Cost | 102,770 | $ 105,269 |
Fair Value | ||
Due in one year or less | 1,253 | |
Due after one year through five years | 1,890 | |
Due after five years through ten years | 19,518 | |
Due after ten years or more | 23,672 | |
Mortgage-backed securities, due in monthly installments | 58,319 | |
Fair Value | $ 104,652 | $ 106,256 |
Loans, Allowance for Credit L_3
Loans, Allowance for Credit Losses and Impaired Loans - Major Categories of Loans (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | $ 1,020,722 | $ 1,000,124 | ||
Less: Unamortized discounts on acquired loans | (5,533) | (6,136) | ||
Less: Allowance for loan losses | (7,819) | (7,304) | $ (7,063) | $ (7,063) |
Carrying amount | 1,007,370 | 986,684 | ||
Construction and Land Development | ||||
Investment Securities | ||||
Less: Allowance for loan losses | (718) | (602) | (598) | (647) |
Residential Real Estate | ||||
Investment Securities | ||||
Less: Allowance for loan losses | (1,419) | (1,380) | (1,509) | (1,521) |
Nonresidential | ||||
Investment Securities | ||||
Less: Allowance for loan losses | (4,343) | (4,074) | (3,696) | (3,629) |
Home Equity Loans | ||||
Investment Securities | ||||
Less: Allowance for loan losses | (169) | (142) | (147) | (122) |
Real Estate Mortgage | Construction and Land Development | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 90,872 | 85,270 | ||
Real Estate Mortgage | Residential Real Estate | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 206,832 | 209,678 | ||
Real Estate Mortgage | Nonresidential | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 558,494 | 547,991 | ||
Real Estate Mortgage | Home Equity Loans | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 37,596 | 37,912 | ||
Commercial | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 120,916 | 113,513 | ||
Less: Allowance for loan losses | (885) | (826) | (655) | (641) |
Consumer and Other | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 6,012 | 5,760 | ||
Less: Allowance for loan losses | (19) | (14) | $ (11) | $ (13) |
Originated Loans | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 612,505 | 562,985 | ||
Originated Loans | Real Estate Mortgage | Construction and Land Development | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 69,455 | 59,236 | ||
Originated Loans | Real Estate Mortgage | Residential Real Estate | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 114,748 | 108,590 | ||
Originated Loans | Real Estate Mortgage | Nonresidential | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 347,059 | 325,916 | ||
Originated Loans | Real Estate Mortgage | Home Equity Loans | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 16,177 | 13,736 | ||
Originated Loans | Commercial | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 61,952 | 52,838 | ||
Originated Loans | Consumer and Other | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 3,114 | 2,669 | ||
Acquired Loans | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 408,217 | 437,139 | ||
Carrying amount | 402,684 | 431,003 | ||
Acquired Loans | Real Estate Mortgage | Construction and Land Development | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 21,417 | 26,034 | ||
Acquired Loans | Real Estate Mortgage | Residential Real Estate | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 92,084 | 101,088 | ||
Acquired Loans | Real Estate Mortgage | Nonresidential | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 211,435 | 222,075 | ||
Acquired Loans | Real Estate Mortgage | Home Equity Loans | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 21,419 | 24,176 | ||
Acquired Loans | Commercial | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | 58,964 | 60,675 | ||
Acquired Loans | Consumer and Other | ||||
Investment Securities | ||||
Loans before unamortized discounts and allowance for loan losses | $ 2,898 | $ 3,091 |
Loans, Allowance for Credit L_4
Loans, Allowance for Credit Losses and Impaired Loans - Loan Impairment and Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Allowance for credit losses | |||
Beginning Balance | $ 7,304 | $ 7,063 | $ 7,063 |
Charge-offs | (170) | (341) | |
Recoveries | 37 | 41 | |
Provisions for credit losses | 648 | 300 | |
Ending Balance | 7,819 | 7,063 | 7,304 |
Individually evaluated for impairment: Balance in allowance | 478 | 572 | |
Individually evaluated for impairment: Related loan balance | 21,251 | 18,324 | |
Collectively evaluated for impairment: Balance in allowance | 7,341 | 6,732 | |
Collectively evaluated for impairment: Related loan balance | 993,938 | 975,664 | |
Unamortized discounts on acquired loans | 5,533 | 6,136 | |
Non-accrual loans | |||
Loans past due 90 days or more still accruing interest | 293 | 5 | |
Construction and Land Development | |||
Allowance for credit losses | |||
Beginning Balance | 602 | 647 | 647 |
Charge-offs | (11) | ||
Recoveries | 1 | ||
Provisions for credit losses | 116 | (39) | |
Ending Balance | 718 | 598 | 602 |
Residential Real Estate | |||
Allowance for credit losses | |||
Beginning Balance | 1,380 | 1,521 | 1,521 |
Charge-offs | (25) | ||
Recoveries | 4 | 2 | |
Provisions for credit losses | 60 | (14) | |
Ending Balance | 1,419 | 1,509 | 1,380 |
Nonresidential | |||
Allowance for credit losses | |||
Beginning Balance | 4,074 | 3,629 | 3,629 |
Charge-offs | (38) | (191) | |
Recoveries | 3 | 4 | |
Provisions for credit losses | 304 | 254 | |
Ending Balance | 4,343 | 3,696 | 4,074 |
Home Equity Loans | |||
Allowance for credit losses | |||
Beginning Balance | 142 | 122 | 122 |
Charge-offs | (4) | ||
Recoveries | 10 | ||
Provisions for credit losses | 17 | 29 | |
Ending Balance | 169 | 147 | 142 |
Real Estate Mortgage | Construction and Land Development | |||
Allowance for credit losses | |||
Individually evaluated for impairment: Related loan balance | 388 | 723 | |
Collectively evaluated for impairment: Balance in allowance | 718 | 602 | |
Collectively evaluated for impairment: Related loan balance | 90,106 | 84,028 | |
Real Estate Mortgage | Residential Real Estate | |||
Allowance for credit losses | |||
Individually evaluated for impairment: Balance in allowance | 181 | 216 | |
Individually evaluated for impairment: Related loan balance | 4,417 | 3,905 | |
Collectively evaluated for impairment: Balance in allowance | 1,238 | 1,164 | |
Collectively evaluated for impairment: Related loan balance | 202,064 | 205,381 | |
Non-accrual loans | |||
Loans past due 90 days or more still accruing interest | 293 | ||
Real Estate Mortgage | Nonresidential | |||
Allowance for credit losses | |||
Individually evaluated for impairment: Balance in allowance | 90 | 82 | |
Individually evaluated for impairment: Related loan balance | 14,287 | 11,449 | |
Collectively evaluated for impairment: Balance in allowance | 4,253 | 3,991 | |
Collectively evaluated for impairment: Related loan balance | 540,973 | 533,100 | |
Real Estate Mortgage | Home Equity Loans | |||
Allowance for credit losses | |||
Individually evaluated for impairment: Related loan balance | 56 | 9 | |
Collectively evaluated for impairment: Balance in allowance | 169 | 142 | |
Collectively evaluated for impairment: Related loan balance | 37,373 | 37,706 | |
Commercial | |||
Allowance for credit losses | |||
Beginning Balance | 826 | 641 | 641 |
Charge-offs | (66) | (98) | |
Recoveries | 7 | 18 | |
Provisions for credit losses | 118 | 94 | |
Ending Balance | 885 | 655 | 826 |
Individually evaluated for impairment: Balance in allowance | 207 | 274 | |
Individually evaluated for impairment: Related loan balance | 2,086 | 2,238 | |
Collectively evaluated for impairment: Balance in allowance | 678 | 552 | |
Collectively evaluated for impairment: Related loan balance | 117,485 | 109,759 | |
Consumer and Other | |||
Allowance for credit losses | |||
Beginning Balance | 14 | 13 | 13 |
Charge-offs | (41) | (37) | |
Recoveries | 13 | 16 | |
Provisions for credit losses | 33 | 19 | |
Ending Balance | 19 | 11 | 14 |
Individually evaluated for impairment: Related loan balance | 17 | ||
Collectively evaluated for impairment: Balance in allowance | 19 | 14 | |
Collectively evaluated for impairment: Related loan balance | 5,937 | 5,690 | |
Non-accrual loans | |||
Loans past due 90 days or more still accruing interest | 5 | ||
Unallocated | |||
Allowance for credit losses | |||
Beginning Balance | 266 | 490 | 490 |
Provisions for credit losses | (43) | ||
Ending Balance | 266 | $ 447 | 266 |
Collectively evaluated for impairment: Balance in allowance | $ 266 | $ 267 |
Loans, Allowance for Credit L_5
Loans, Allowance for Credit Losses and Impaired Loans - Loan by Risk Rating (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | |
Loans by risk rating | ||
Loans and leases receivable, gross | $ 1,015,189 | $ 993,988 |
Non-Accrual | 5,311 | 4,541 |
TDRs | $ 10,913 | $ 10,295 |
Number of TDR accounts | loan | 30 | 33 |
Performing | ||
Loans by risk rating | ||
TDRs | $ 8,250 | $ 8,427 |
Non-performing | ||
Loans by risk rating | ||
TDRs | $ 2,663 | $ 1,868 |
Number of TDR accounts | loan | 6 | 7 |
TDRS on Non-accrual | $ 2,648 | $ 1,868 |
Past Due 30-89 Days | Non-performing | ||
Loans by risk rating | ||
TDRs | 15 | |
Excellent | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 6,548 | 6,605 |
Superior | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 5,907 | 5,732 |
Good | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 973,843 | 954,986 |
Fair | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 19,538 | 16,414 |
Substandard | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 9,353 | 10,251 |
Real Estate Mortgage | Construction and Land Development | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 90,494 | 84,751 |
Non-Accrual | 177 | 177 |
Real Estate Mortgage | Construction and Land Development | Good | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 89,498 | 83,773 |
Real Estate Mortgage | Construction and Land Development | Fair | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 819 | 801 |
Real Estate Mortgage | Construction and Land Development | Substandard | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 177 | 177 |
Real Estate Mortgage | Residential Real Estate | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 206,481 | 209,286 |
Non-Accrual | 1,508 | 1,620 |
TDRs | $ 2,269 | $ 2,323 |
Number of TDR accounts | loan | 11 | 12 |
Real Estate Mortgage | Residential Real Estate | Performing | ||
Loans by risk rating | ||
TDRs | $ 1,388 | $ 1,419 |
Real Estate Mortgage | Residential Real Estate | Non-performing | ||
Loans by risk rating | ||
TDRs | $ 881 | $ 904 |
Number of TDR accounts | loan | 3 | 3 |
TDRS on Non-accrual | $ 866 | $ 904 |
Real Estate Mortgage | Residential Real Estate | Past Due 30-89 Days | Non-performing | ||
Loans by risk rating | ||
TDRs | 15 | |
Real Estate Mortgage | Residential Real Estate | Superior | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 134 | 139 |
Real Estate Mortgage | Residential Real Estate | Good | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 199,142 | 202,690 |
Real Estate Mortgage | Residential Real Estate | Fair | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 4,207 | 3,321 |
Real Estate Mortgage | Residential Real Estate | Substandard | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 2,998 | 3,136 |
Real Estate Mortgage | Nonresidential | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 555,260 | 544,551 |
Non-Accrual | 2,346 | 2,608 |
TDRs | $ 7,437 | $ 7,934 |
Number of TDR accounts | loan | 18 | 20 |
Real Estate Mortgage | Nonresidential | Performing | ||
Loans by risk rating | ||
TDRs | $ 6,862 | $ 7,008 |
Real Estate Mortgage | Nonresidential | Non-performing | ||
Loans by risk rating | ||
TDRs | $ 575 | $ 926 |
Number of TDR accounts | loan | 2 | 3 |
TDRS on Non-accrual | $ 575 | $ 926 |
Real Estate Mortgage | Nonresidential | Excellent | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 397 | 405 |
Real Estate Mortgage | Nonresidential | Superior | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 3,580 | 3,652 |
Real Estate Mortgage | Nonresidential | Good | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 534,658 | 525,465 |
Real Estate Mortgage | Nonresidential | Fair | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 12,003 | 9,739 |
Real Estate Mortgage | Nonresidential | Substandard | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 4,622 | 5,290 |
Real Estate Mortgage | Home Equity Loans | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 37,429 | 37,714 |
Non-Accrual | 5 | |
Real Estate Mortgage | Home Equity Loans | Superior | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 122 | 122 |
Real Estate Mortgage | Home Equity Loans | Good | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 37,243 | 37,528 |
Real Estate Mortgage | Home Equity Loans | Fair | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 64 | 64 |
Commercial | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 119,571 | 111,997 |
Non-Accrual | 1,280 | 131 |
TDRs | $ 1,207 | $ 38 |
Number of TDR accounts | loan | 1 | 1 |
Commercial | Non-performing | ||
Loans by risk rating | ||
TDRs | $ 1,207 | $ 38 |
Number of TDR accounts | loan | 1 | 1 |
TDRS on Non-accrual | $ 1,207 | $ 38 |
Commercial | Excellent | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 6,044 | 6,089 |
Commercial | Superior | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 2,071 | 1,818 |
Commercial | Good | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 107,471 | 99,973 |
Commercial | Fair | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 2,429 | 2,469 |
Commercial | Substandard | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 1,556 | 1,648 |
Consumer and Other | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 5,954 | 5,689 |
Consumer and Other | Excellent | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 107 | 111 |
Consumer and Other | Superior | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 1 | |
Consumer and Other | Good | ||
Loans by risk rating | ||
Loans and leases receivable, gross | 5,831 | 5,557 |
Consumer and Other | Fair | ||
Loans by risk rating | ||
Loans and leases receivable, gross | $ 16 | $ 20 |
Loans, Allowance for Credit L_6
Loans, Allowance for Credit Losses and Impaired Loans - Aging (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Past due financing receivables | ||
Total Past Due | $ 8,090 | $ 7,430 |
Current Balance | 1,012,632 | 992,694 |
Total Financing Receivables | 1,020,722 | 1,000,124 |
Recorded Investment >90 Days Past Due and Accruing | 293 | 5 |
Non-accrual loans | 5,311 | 4,541 |
Unamortized discounts on acquired loans | 5,533 | 6,136 |
30-59 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 3,911 | 2,587 |
Non-accrual loans | 1,500 | 956 |
60-89 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 237 | 2,047 |
Non-accrual loans | 155 | 81 |
Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 3,942 | 2,796 |
Non-accrual loans | 3,600 | 2,600 |
Real Estate Mortgage | Construction and Land Development | ||
Past due financing receivables | ||
Total Past Due | 217 | 601 |
Current Balance | 90,655 | 84,669 |
Total Financing Receivables | 90,872 | 85,270 |
Non-accrual loans | 177 | 177 |
Real Estate Mortgage | Construction and Land Development | 30-59 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 424 | |
Real Estate Mortgage | Construction and Land Development | 60-89 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 40 | |
Real Estate Mortgage | Construction and Land Development | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 177 | 177 |
Real Estate Mortgage | Residential Real Estate | ||
Past due financing receivables | ||
Total Past Due | 3,078 | 2,675 |
Current Balance | 203,754 | 207,003 |
Total Financing Receivables | 206,832 | 209,678 |
Recorded Investment >90 Days Past Due and Accruing | 293 | |
Non-accrual loans | 1,508 | 1,620 |
Real Estate Mortgage | Residential Real Estate | 30-59 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 2,008 | 1,296 |
Real Estate Mortgage | Residential Real Estate | 60-89 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 155 | 677 |
Real Estate Mortgage | Residential Real Estate | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 915 | 702 |
Real Estate Mortgage | Nonresidential | ||
Past due financing receivables | ||
Total Past Due | 3,243 | 2,602 |
Current Balance | 555,251 | 545,389 |
Total Financing Receivables | 558,494 | 547,991 |
Non-accrual loans | 2,346 | 2,608 |
Real Estate Mortgage | Nonresidential | 30-59 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 1,631 | 635 |
Real Estate Mortgage | Nonresidential | 60-89 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 42 | 144 |
Real Estate Mortgage | Nonresidential | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 1,570 | 1,823 |
Real Estate Mortgage | Home Equity Loans | ||
Past due financing receivables | ||
Total Past Due | 19 | |
Current Balance | 37,577 | 37,912 |
Total Financing Receivables | 37,596 | 37,912 |
Non-accrual loans | 5 | |
Real Estate Mortgage | Home Equity Loans | 30-59 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 19 | |
Commercial | ||
Past due financing receivables | ||
Total Past Due | 1,527 | 1,532 |
Current Balance | 119,389 | 111,981 |
Total Financing Receivables | 120,916 | 113,513 |
Non-accrual loans | 1,280 | 131 |
Commercial | 30-59 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 247 | 231 |
Commercial | 60-89 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 1,207 | |
Commercial | Greater than 90 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | 1,280 | 94 |
Consumer and Other | ||
Past due financing receivables | ||
Total Past Due | 6 | 20 |
Current Balance | 6,006 | 5,740 |
Total Financing Receivables | 6,012 | 5,760 |
Recorded Investment >90 Days Past Due and Accruing | 5 | |
Consumer and Other | 30-59 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | $ 6 | 1 |
Consumer and Other | 60-89 Days Past Due | ||
Past due financing receivables | ||
Total Past Due | $ 19 |
Loans, Allowance for Credit L_7
Loans, Allowance for Credit Losses and Impaired Loans - Impaired loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with specific reserves - Recorded Investment | $ 4,309 | $ 4,457 |
Impaired loans with specific reserves - Unpaid Principal Balance | 4,347 | 4,457 |
Impaired loans with specific reserves - Interest Income Recognized | 80 | 313 |
Impaired loans with specific reserves - Specific Reserve | 478 | 572 |
Impaired loans with specific reserves - Average Recorded Investment | 4,382 | 5,862 |
Impaired loans with no specific reserves - Recorded Investment | 18,345 | 15,608 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 19,448 | 15,615 |
Impaired loans with no specific reserves - Interest Income Recognized | 260 | 1,290 |
Impaired loans with no specific reserves - Average Recorded Investment | 16,976 | 18,010 |
Impaired loans specific reserves - Recorded Investment | 22,654 | 20,065 |
Impaired loans specific reserves - Unpaid Principal Balance | 23,795 | 20,072 |
Impaired loans specific reserves - Interest Income Recognized | 340 | 1,603 |
Impaired loans specific reserves - Average Recorded Investment | 21,358 | 23,872 |
Loans | ||
Carrying amount | 1,007,370 | 986,684 |
Unamortized discounts on acquired loans | 5,533 | 6,136 |
PCI loans | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with specific reserves - Specific Reserve | 22,700 | |
Loans | ||
Carrying amount | 5,134 | 5,373 |
Unamortized discounts on acquired loans | 989 | |
Individual evaluation for impairment not required | 620 | |
Real Estate Mortgage | Construction and Land Development | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with no specific reserves - Recorded Investment | 388 | 723 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 388 | 545 |
Impaired loans with no specific reserves - Interest Income Recognized | 3 | 34 |
Impaired loans with no specific reserves - Average Recorded Investment | 556 | 471 |
Real Estate Mortgage | Residential Real Estate | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with specific reserves - Recorded Investment | 691 | 727 |
Impaired loans with specific reserves - Unpaid Principal Balance | 691 | 727 |
Impaired loans with specific reserves - Specific Reserve | 181 | 216 |
Impaired loans with specific reserves - Average Recorded Investment | 709 | 2,337 |
Impaired loans with no specific reserves - Recorded Investment | 4,528 | 4,064 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 5,299 | 4,717 |
Impaired loans with no specific reserves - Interest Income Recognized | 57 | 243 |
Impaired loans with no specific reserves - Average Recorded Investment | 4,296 | 4,566 |
Real Estate Mortgage | Nonresidential | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with specific reserves - Recorded Investment | 2,411 | 2,456 |
Impaired loans with specific reserves - Unpaid Principal Balance | 2,449 | 2,456 |
Impaired loans with specific reserves - Interest Income Recognized | 69 | 260 |
Impaired loans with specific reserves - Specific Reserve | 90 | 82 |
Impaired loans with specific reserves - Average Recorded Investment | 2,433 | 2,866 |
Impaired loans with no specific reserves - Recorded Investment | 12,365 | 9,734 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 12,697 | 9,266 |
Impaired loans with no specific reserves - Interest Income Recognized | 182 | 909 |
Impaired loans with no specific reserves - Average Recorded Investment | 11,050 | 11,181 |
Real Estate Mortgage | Home Equity Loans | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with no specific reserves - Recorded Investment | 56 | 9 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 56 | 9 |
Impaired loans with no specific reserves - Interest Income Recognized | 1 | 17 |
Impaired loans with no specific reserves - Average Recorded Investment | 32 | 351 |
Commercial | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with specific reserves - Recorded Investment | 1,207 | 1,274 |
Impaired loans with specific reserves - Unpaid Principal Balance | 1,207 | 1,274 |
Impaired loans with specific reserves - Interest Income Recognized | 11 | 53 |
Impaired loans with specific reserves - Specific Reserve | 207 | 274 |
Impaired loans with specific reserves - Average Recorded Investment | 1,240 | 659 |
Impaired loans with no specific reserves - Recorded Investment | 991 | 1,078 |
Impaired loans with no specific reserves - Unpaid Principal Balance | 991 | 1,078 |
Impaired loans with no specific reserves - Interest Income Recognized | 17 | 87 |
Impaired loans with no specific reserves - Average Recorded Investment | 1,034 | $ 1,441 |
Consumer and Other | ||
Financing Receivable, Impaired [Line Items] | ||
Impaired loans with no specific reserves - Recorded Investment | 17 | |
Impaired loans with no specific reserves - Unpaid Principal Balance | 17 | |
Impaired loans with no specific reserves - Average Recorded Investment | $ 8 |
Loans, Allowance for Credit L_8
Loans, Allowance for Credit Losses and Impaired Loans - Acquired loans (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Acquired loans | ||
Total Financing Receivables | $ 1,020,722 | $ 1,000,124 |
Carrying amount | 1,007,370 | 986,684 |
Acquired Loans | ||
Acquired loans | ||
Total Financing Receivables | 408,217 | 437,139 |
Carrying amount | 402,684 | 431,003 |
PCI loans | ||
Acquired loans | ||
Total Financing Receivables | 6,123 | 6,428 |
Carrying amount | 5,134 | 5,373 |
Non PCI loans | ||
Acquired loans | ||
Total Financing Receivables | 402,094 | 430,711 |
Carrying amount | $ 397,550 | $ 425,630 |
Loans, Allowance for Credit L_9
Loans, Allowance for Credit Losses and Impaired Loans - Accretable Yield (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
PCI loans | |||
Changes in accretable yield under ASC 310-20: | |||
Accretion | $ (70) | $ (28) | |
Non-accretable yield on purchased credit impaired loans | 1,600 | $ 1,600 | |
Non PCI loans | |||
Changes in accretable yield under ASC 310-20: | |||
Balance at beginning of period | 5,081 | $ 745 | 745 |
Acquisitions | 4,990 | ||
Accretion | (537) | (654) | |
Balance at end of period | $ 4,544 | $ 5,081 |
Loans, Allowance for Credit _10
Loans, Allowance for Credit Losses and Impaired Loans - Related Party Loans (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Loans, Allowance for Credit Losses and Impaired Loans | ||
Commitments to loan additional funds | $ 0 | $ 0 |
Credit Facilities - Federal Hom
Credit Facilities - Federal Home Loan Bank Advances (Details) - Federal Home Loan Bank of Atlanta - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Advances from Federal Home Loan Banks | ||
Credit facility from FHLB | $ 311,200 | |
Remaining credit availability | 221,500 | |
Outstanding balance - Advances | 89,666 | $ 96,830 |
Average short-term borrowings | 45,000 | 9,300 |
Principal balances outstanding on pledged loans | 241,900 | 223,500 |
FHLB 1.31% Fixed Rate Hybrid Advance Maturing April 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 12,000 | |
Fixed Interest rate | 1.31% | |
FHLB 0.30% Fixed Rate Hybrid Advance 1 Maturing April 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 6,000 | |
Fixed Interest rate | 0.30% | |
FHLB 0.30% Fixed Rate Hybrid Advance 2 Maturing April 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 3,200 | |
Fixed Interest rate | 0.30% | |
FHLB 2.09% Fixed Rate Hybrid Advance Maturing June 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 15,000 | |
Fixed Interest rate | 2.09% | |
FHLB 3.04% Fixed Rate Hybrid Advance Maturing November 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 5,000 | $ 5,000 |
Fixed Interest rate | 3.04% | 3.04% |
FHLB 2.91% Fixed Rate Hybrid Advance Maturing November 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 5,000 | $ 5,000 |
Fixed Interest rate | 2.91% | 2.91% |
FHLB 2.44% Fixed Rate Hybrid Advance Maturing April 2021 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 6,000 | $ 6,000 |
Fixed Interest rate | 2.44% | 2.44% |
FHLB 2.68% Convertible Rate Advance Maturing May 2021 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 10,000 | $ 10,000 |
Fixed Interest rate | 2.68% | 2.68% |
FHLB 3.15% Fixed Rate Hybrid Advance Maturing October 2022 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 5,000 | $ 5,000 |
Fixed Interest rate | 3.15% | 3.15% |
FHLB 1.62% Principal Reducing Credit Advance Maturing March 2023 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 1,286 | $ 1,393 |
Fixed Interest rate | 1.62% | 1.62% |
FHLB 1.29% Fixed Rate Hybrid Advance 1 Maturing March 2024 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 9,900 | |
Fixed Interest rate | 1.29% | |
FHLB 1.29% Fixed Rate Hybrid Advance 2 Maturing March 2024 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 9,900 | |
Fixed Interest rate | 1.29% | |
FHLB 1.99% Principal Reducing Credit Advance Maturing March 2026 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 1,380 | $ 1,437 |
Fixed Interest rate | 1.99% | 1.99% |
FHLB 1.73% Fixed Rate Advance Maturing January 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 12,000 | |
Fixed Interest rate | 1.73% | |
FHLB 1.76% Fixed Rate Advance Maturing January 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 4,500 | |
Fixed Interest rate | 1.76% | |
FHLB 1.68% Fixed Rate Advance 1 Maturing January 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 7,600 | |
Fixed Interest rate | 1.68% | |
FHLB 1.68% Fixed Rate Advance 2 Maturing January 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 7,700 | |
Fixed Interest rate | 1.68% | |
FHLB 1.70% Fixed Rate Advance 1 Maturing January 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 6,000 | |
Fixed Interest rate | 1.70% | |
FHLB 1.70% Fixed Rate Advance 2 Maturing January 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 7,000 | |
Fixed Interest rate | 1.70% | |
FHLB 1.71% Fixed Rate Advance Maturing January 2020 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 3,200 | |
Fixed Interest rate | 1.71% | |
FHLB 1.51% Fixed Rate Hybrid Advance Maturing June 2019 | ||
Advances from Federal Home Loan Banks | ||
Outstanding balance - Advances | $ 15,000 | |
Fixed Interest rate | 1.51% |
Credit Facilities - Subordinate
Credit Facilities - Subordinated Loans (Details) - USD ($) $ in Millions | Jan. 31, 2018 | Oct. 31, 2015 |
Subordinated loan maturing October 2025 | ||
Long-Term Obligations | ||
Aggregate principal amount | $ 2 | |
Fixed Interest rate | 6.71% | |
Subordinated loan maturing April 2028 | ||
Long-Term Obligations | ||
Aggregate principal amount | $ 4.5 | |
Fixed Interest rate | 6.875% |
Credit Facilities - Partners Ba
Credit Facilities - Partners Bank Debt (Details) - Virginia Partners Bank - USD ($) $ in Thousands | Apr. 30, 2015 | Dec. 14, 2012 | Mar. 31, 2020 |
Deed of Trust Loan | |||
Long-Term Obligations | |||
Amortization period | 25 years | ||
Fixed Interest rate | 3.60% | ||
Period contractual interest rate remains fixed | 10 years | ||
Deed of Trust Loan | 10 Year US Treasury (UST) Interest Rate | |||
Long-Term Obligations | |||
Basis spread on variable rate | 3.00% | ||
410 William Street, Fredericksburg, VA | |||
Long-Term Obligations | |||
Ownership percentage | 50.00% | ||
Ownership percentage acquired | 50.00% | ||
410 William Street, Fredericksburg, VA | Deed of Trust Loan | |||
Long-Term Obligations | |||
Indemnification of debt obligations | $ 886 | ||
Outstanding debt balance | $ 698 |
Credit Facilities - Secured Cre
Credit Facilities - Secured Credit Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Credit Facilities | |||
Interest expense | $ 3,239 | $ 1,768 | |
Secured Credit | |||
Credit Facilities | |||
Maximum borrowing capacity | 5,000 | ||
Borrowing outstanding | 0 | $ 0 | |
Unsecured Credit | |||
Credit Facilities | |||
Maximum borrowing capacity | 59,000 | ||
Borrowing outstanding | 0 | 0 | |
Federal Reserve Bank Discount Window | |||
Credit Facilities | |||
Borrowing outstanding | 0 | 0 | |
Federal Reserve Bank Discount Window | Collateral Pledged | |||
Credit Facilities | |||
Combined amortized cost and fair value | 2,300 | 2,300 | |
Johnson Mortgage Company LLC | Secured Credit | |||
Credit Facilities | |||
Maximum borrowing capacity | 3,000 | ||
Borrowing outstanding | 444 | $ 576 | |
Interest expense | $ 20 | ||
Johnson Mortgage Company LLC | Secured Credit | LIBOR | |||
Credit Facilities | |||
Variable rate basis | one month LIBOR | ||
Basis spread on variable rate | 2.25% | ||
Rounding factor for effective interest rate | 0.125% | ||
Effective interest rate | 3.90% | 4.00% |
Credit Facilities - Maturities
Credit Facilities - Maturities (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Maturities on debt | |
2020 | $ 47,138 |
2021 | 16,659 |
2022 | 5,659 |
2023 | 337 |
2024 | $ 20,030 |
Lease Commitments - Lease Infor
Lease Commitments - Lease Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)lease | Jan. 01, 2019USD ($) | |
Leases | ||
Lease, Practical Expedients, Package | true | |
Lease, Practical Expedient, Use of Hindsight | true | |
Number of lease locations | lease | 18 | |
Number of operating leases | lease | 16 | |
Number of finance leases | lease | 2 | |
Options to renew | true | |
Renewal term of the lease | 5 years | |
ASU 2016-02 | Restatement Adjustment | ||
Leases | ||
Lease right-of-use asset | $ | $ 3,600 | |
Lease liability | $ | $ 3,600 | |
Maximum | ||
Leases | ||
Initial term of leases not recorded on the balance sheet | 12 months | |
Threshold of discounted present value of future cash flows below which a lease is not recorded on the balance sheet | $ | $ 25 | |
Term of lease including available lease renewal options | 15 years |
Lease Commitments - Supplementa
Lease Commitments - Supplemental Lease Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Balance Sheet | |
Right-of-use asset, operating lease | $ 4,308 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant and Equipment, Net |
Lease liability, operating lease | $ 4,609 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other Liabilities |
Right-of-use asset, finance lease | $ 1,927 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant and Equipment, Net |
Lease liability, finance lease | $ 2,327 |
Finance Lease, Liability, Statement of Financial Position [Extensible List] | Other Liabilities |
Lease cost information | |
Weighted average lease term - Operating Leases | 8 years 3 months |
Weighted average lease term - Finance Leases | 13 years 10 months 2 days |
Weighted average discount rate - Operating Leases | 2.81% |
Weighted average discount rate - Finance Leases | 2.84% |
Operating outgoing cash flows from operating leases | $ 222 |
Operating outgoing cash flows from finance leases | 45 |
Premises and Equipment | |
Income Statement | |
Operating lease cost | 234 |
Borrowings | |
Income Statement | |
Finance lease cost | $ 32 |
Lease Commitments - Maturities
Lease Commitments - Maturities of lease Liabilities (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Operating Leases: | |
One year or less | $ 748 |
One to three years | 1,222 |
Three to five years | 1,124 |
Over 5 years | 2,206 |
Total undiscounted cash flows | 5,300 |
Less: Discount | (691) |
Lease Liabilities | 4,609 |
Finance Leases: | |
One year or less | 178 |
One to three years | 357 |
Three to five years | 387 |
Over 5 years | 1,926 |
Total undiscounted cash flows | 2,848 |
Less: Discount | (521) |
Lease Liabilities | $ 2,327 |
Stock Option Plans - Delmar Ban
Stock Option Plans - Delmar Bancorp Stock Option Plan (Details) - Delmar 2004 Stock Option Plan - Stock options | 3 Months Ended |
Mar. 31, 2020shares | |
Equity Compensation | |
Contractual life | 10 years |
Vesting period (in years) | 4 years |
Options available to be granted | 0 |
Number of options exercised | 0 |
Stock Option Plans - Liberty Be
Stock Option Plans - Liberty Bell Stock Option Plan (Details) - Liberty 2004 Stock Option Plan - Stock options | 1 Months Ended | |
Jul. 31, 2017$ / sharesshares | Mar. 31, 2020USD ($)$ / sharesshares | |
Equity Compensation | ||
Contractual life | 10 years | |
Vesting period (in years) | 5 years | |
Conversion ratio, stock based compensation | 0.2857 | |
Number of options converted | shares | 48,225 | |
Exercise price of option converted | $ 1.18 | |
Number of options outstanding after conversion | shares | 13,771 | |
Exercise price of option outstanding | $ 4.14 | |
Shares | shares | 8,709 | |
Average price | $ 4.14 | |
Employees | ||
Equity Compensation | ||
Exercise price of option outstanding | $ 4.14 | |
Shares | shares | 2,355 | |
Average price | $ 4.14 | |
Amount | $ | $ 9,750 | |
Directors | ||
Equity Compensation | ||
Exercise price of option outstanding | $ 4.14 | |
Shares | shares | 6,354 | |
Average price | $ 4.14 | |
Amount | $ | $ 26,306 |
Stock Option Plans - Virginia P
Stock Option Plans - Virginia Partners Stock Option Plan Information (Details) - Virginia Partners Stock Option Plan - Stock options | Nov. 15, 2019$ / sharesshares | Mar. 31, 2020$ / shares | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2019$ / shares |
Equity Compensation | ||||||
Vesting period (in years) | 3 years | 3 years | ||||
Percentage of options vesting at the merger | 100.00% | |||||
Number of options converted | shares | 149,200 | |||||
Exercise price of option converted | $ / shares | $ 10.52 | |||||
Number of options outstanding after conversion | shares | 256,294 | |||||
Exercise price of option outstanding | $ / shares | $ 6.13 | $ 6.16 | $ 6.14 | |||
Conversion ratio, stock based compensation | 1.7179 | |||||
Maximum | ||||||
Equity Compensation | ||||||
Contractual life | 10 years |
Stock Option Plans - Virginia_2
Stock Option Plans - Virginia Partners Stock Option Activity (Details) - Virginia Partners Stock Option Plan - Stock options - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Outstanding shares | ||
Outstanding at the beginning of year | 247,705 | |
Exercised | (14,601) | |
Outstanding at the end of year | 233,104 | 247,705 |
Options exercisable at end of year | 233,104 | |
Weighted Average Exercise Price | ||
Balance at the beginning of year | $ 6.14 | |
Exercised | 5.83 | |
Balance at the end of year | 6.16 | $ 6.14 |
Options exercisable at end of year | $ 6.16 | |
Weighted-Average Remaining Contractual Life | ||
Outstanding at end of year | 3 years 9 months 15 days | 3 years 9 months 22 days |
Intrinsic value, Balance at the end of year | $ (85,938) |
Stock Option Plans - Valuation
Stock Option Plans - Valuation Assumptions (Details) - Stock options | 3 Months Ended |
Mar. 31, 2020 | |
Fair value assumptions | |
Dividend yield | 1.34% |
Expected life | 1 year 10 months 28 days |
Expected volatility | 4.34% |
Risk-free interest rate | 1.60% |
Restricted Stock Plan (Details)
Restricted Stock Plan (Details) - Restricted stock plan - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock options | ||
Shares reserved for issuance | 405,805 | |
Weighted Average Grant Date Fair Value | ||
Stock-based compensation expense recognized | $ 5 | $ 5 |
Stock based compensation expense, net of tax | 4 | $ 4 |
Total unrecognized compensation cost related to non-vested restricted stock units | $ 21 | |
Weighted-average period over which unrecognized compensation cost will be recognized | 2 years | |
Employees | ||
Shares | ||
Non-vested balance at beginning of period (in shares) | 6,000 | |
Vested (in shares) | (3,000) | |
Non-vested balance at end of period (in shares) | 3,000 | |
Weighted Average Grant Date Fair Value | ||
Non-vested balance at beginning of period (in dollars per share) | $ 7.30 | |
Vested (in dollars per share) | 7.30 | |
Non-vested balance at end of period (in dollars per share) | $ 7.30 |
Earnings Per Share - Diluted Ea
Earnings Per Share - Diluted Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Diluted earnings (loss) per share | ||
NET INCOME | $ 2,422 | $ 1,398 |
Net (income) attributable to noncontrolling interest | (16) | |
Net income applicable to basic earnings per common share | $ 2,406 | $ 1,398 |
Weighted average shares outstanding | 17,805,714 | 9,985,321 |
Basic earnings per share | $ 0.135 | $ 0.140 |
Effect of dilutive securities: | ||
Cash received for the exercise of stock options | $ 85 | |
Diluted weighted average shares and common stock equivalents | 17,862 | 10,000 |
Diluted earnings per share | $ 0.135 | $ 0.140 |
Restricted stock plan | ||
Effect of dilutive securities: | ||
Weighted average shares outstanding under options/ restricted stock plans | 6 | 9 |
Delmar 2004 Stock Option Plan | Stock options | ||
Effect of dilutive securities: | ||
Weighted average shares outstanding under options/ restricted stock plans | 18 | |
Weighted average exercise price per share | $ 9.05 | |
Cash received for the exercise of stock options | $ 167 | |
Average market value per share | $ 7.16 | |
Liberty 2004 Stock Option Plan | ||
Effect of dilutive securities: | ||
Less: Treasury stock purchased with assumed proceeds from exercise | 5 | 6 |
Liberty 2004 Stock Option Plan | Stock options | ||
Effect of dilutive securities: | ||
Weighted average shares outstanding under options/ restricted stock plans | 9 | 12 |
Weighted average exercise price per share | $ 4.22 | $ 3.98 |
Cash received for the exercise of stock options | $ 38 | $ 46 |
Average market value per share | $ 7.22 | $ 7.16 |
Partners 2015 Stock Option Plan | ||
Effect of dilutive securities: | ||
Weighted average shares outstanding under options/ restricted stock plans | 236,000 | |
Weighted average exercise price per share | $ 5.83 | |
Cash received for the exercise of stock options | $ 1,374 | |
Average market value per share | $ 7.22 | |
Less: Treasury stock purchased with assumed proceeds from exercise | 190,000 |
Regulatory Capital Requiremen_3
Regulatory Capital Requirements (Details) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Regulatory Capital Requirements | ||
Common Equity Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 11.70% | 11.70% |
Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 11.70% | 11.70% |
Total Capital (to risk weighted assets), ratio (as a percent) | 13.10% | 13.10% |
Tier 1 Leverage ratio (as a percent) | 9.60% | 11.90% |
Minimum | FDIC | ||
Regulatory Capital Requirements | ||
Common Equity Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 4.50% | |
Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 6.00% | |
Total Capital (to risk weighted assets), ratio (as a percent) | 8.00% | |
Tier 1 Leverage ratio (as a percent) | 4.00% | |
Basel III Capital Rules | FDIC | ||
Regulatory Capital Requirements | ||
Capital conservation buffer ratio | 2.50% | |
Capital conservation buffer ratio annual increment during phase-in period | 0.625% | |
Implementation period of capital conservation buffer requirement | 4 years | |
Basel III Capital Rules | Minimum | FDIC | ||
Regulatory Capital Requirements | ||
Common Equity Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 7.00% | |
Tier 1 Capital (to risk weighted assets), ratio (as a percent) | 8.50% | |
Total Capital (to risk weighted assets), ratio (as a percent) | 10.50% |
Regulatory Capital Requiremen_4
Regulatory Capital Requirements - Bank's capital amounts (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Total Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 134,174 | $ 131,443 |
Actual, ratio | 13.10% | 13.10% |
For Capital Adequacy Purposes | $ 107,491 | $ 105,140 |
For Capital Adequacy Purposes, ratio | 10.50% | 10.50% |
Tier I Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 119,590 | $ 117,374 |
Actual, ratio | 11.70% | 11.70% |
For Capital Adequacy Purposes | $ 87,016 | $ 85,113 |
For Capital Adequacy Purposes, ratio | 8.50% | 8.50% |
Common Equity Tier I Ratio (To Risk Weighted Assets) | ||
Actual | $ 119,590 | $ 117,374 |
Actual, ratio | 11.70% | 11.70% |
For Capital Adequacy Purposes | $ 71,660 | $ 70,224 |
For Capital Adequacy Purposes, ratio | 7.00% | 7.00% |
Tier I Leverage Ratio (To Average Assets) | ||
Actual | $ 119,590 | $ 117,374 |
Actual, ratio | 9.60% | 11.90% |
For Capital Adequacy Purposes | $ 49,784 | $ 39,331 |
For Capital Adequacy Purposes, ratio | 4.00% | 4.00% |
The Bank of Delmarva | ||
Total Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 80,926 | $ 79,080 |
Actual, ratio | 12.70% | 12.70% |
For Capital Adequacy Purposes | $ 66,933 | $ 65,132 |
For Capital Adequacy Purposes, ratio | 10.50% | 10.50% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 63,746 | $ 62,030 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 10.00% | 10.00% |
Tier I Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 73,431 | $ 71,752 |
Actual, ratio | 11.50% | 11.60% |
For Capital Adequacy Purposes | $ 54,184 | $ 52,726 |
For Capital Adequacy Purposes, ratio | 8.50% | 8.50% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 50,997 | $ 49,624 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 8.00% | 8.00% |
Common Equity Tier I Ratio (To Risk Weighted Assets) | ||
Actual | $ 73,431 | $ 71,752 |
Actual, ratio | 11.50% | 11.60% |
For Capital Adequacy Purposes | $ 44,622 | $ 43,421 |
For Capital Adequacy Purposes, ratio | 7.00% | 7.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 41,435 | $ 40,320 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 6.50% | 6.50% |
Tier I Leverage Ratio (To Average Assets) | ||
Actual | $ 73,431 | $ 71,752 |
Actual, ratio | 9.40% | 9.10% |
For Capital Adequacy Purposes | $ 31,347 | $ 31,520 |
For Capital Adequacy Purposes, ratio | 4.00% | 4.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 39,184 | $ 39,399 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 5.00% | 5.00% |
Virginia Partners Bank | ||
Total Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 48,085 | $ 47,122 |
Actual, ratio | 12.50% | 12.50% |
For Capital Adequacy Purposes | $ 40,258 | $ 39,676 |
For Capital Adequacy Purposes, ratio | 10.50% | 10.50% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 38,341 | $ 37,787 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 10.00% | 10.00% |
Tier I Capital Ratio (To Risk Weighted Assets) | ||
Actual | $ 47,496 | $ 46,881 |
Actual, ratio | 12.40% | 12.40% |
For Capital Adequacy Purposes | $ 32,590 | $ 32,119 |
For Capital Adequacy Purposes, ratio | 8.50% | 8.50% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 30,673 | $ 30,230 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 8.00% | 8.00% |
Common Equity Tier I Ratio (To Risk Weighted Assets) | ||
Actual | $ 47,496 | $ 46,881 |
Actual, ratio | 12.40% | 12.40% |
For Capital Adequacy Purposes | $ 26,839 | $ 26,451 |
For Capital Adequacy Purposes, ratio | 7.00% | 7.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 24,922 | $ 24,562 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 6.50% | 6.50% |
Tier I Leverage Ratio (To Average Assets) | ||
Actual | $ 47,496 | $ 46,881 |
Actual, ratio | 10.50% | 10.40% |
For Capital Adequacy Purposes | $ 18,170 | $ 18,093 |
For Capital Adequacy Purposes, ratio | 4.00% | 4.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions | $ 22,712 | $ 22,616 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 5.00% | 5.00% |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments - Estimated Fair Value and Related Carrying Values of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Financial assets: | ||
Cash and due from banks | $ 29,882 | $ 36,295 |
Interest bearing deposits | 23,221 | 27,586 |
Federal funds sold | 31,587 | 31,230 |
Securities: Available for sale | 104,652 | 106,256 |
Loans, net of allowance for credit losses | 1,012,560 | 990,239 |
Accrued interest receivable | 3,302 | 3,138 |
Federal Home Loan Bank stock | 4,959 | 5,180 |
Atlantic Central Bankers stock | 131 | 131 |
Other investments | 2,849 | 2,838 |
Financial liabilities: | ||
Deposits | 1,020,724 | 1,006,781 |
Accrued interest payable | 584 | 572 |
FHLB advances, notes payable, and financing leases | 98,950 | 105,021 |
Unrecognized financial instruments: | ||
Commitments to extend credit | 185,758 | 184,376 |
Standby letters of credit | 5,362 | 4,045 |
Estimated Fair Value | ||
Financial assets: | ||
Cash and due from banks | 29,882 | 36,295 |
Interest bearing deposits | 23,221 | 27,586 |
Federal funds sold | 31,587 | 31,230 |
Securities: Available for sale | 104,652 | 106,256 |
Loans, net of allowance for credit losses | 1,005,188 | 976,636 |
Accrued interest receivable | 3,302 | 3,138 |
Federal Home Loan Bank stock | 4,959 | 5,180 |
Atlantic Central Bankers stock | 131 | 131 |
Other investments | 2,849 | 2,838 |
Financial liabilities: | ||
Deposits | 1,028,956 | 1,008,842 |
Accrued interest payable | 584 | 572 |
FHLB advances, notes payable, and financing leases | 103,966 | 109,260 |
Unrecognized financial instruments: | ||
Commitments to extend credit | 185,758 | 184,376 |
Standby letters of credit | $ 5,362 | $ 4,045 |
Fair Values of Financial Inst_4
Fair Values of Financial Instruments - Financial Instruments Not Disclosed Elsewhere (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | ||
Financial assets: | ||
Loans, net | $ 1,012,560 | $ 990,239 |
Financial liabilities: | ||
Interest-bearing deposits | 752,498 | 745,150 |
FHLB advances, notes payable, and financing leases | 98,950 | 105,021 |
Estimated Fair Value | ||
Financial assets: | ||
Loans, net | 1,005,188 | 976,636 |
Financial liabilities: | ||
Interest-bearing deposits | 760,730 | 747,211 |
FHLB advances, notes payable, and financing leases | 103,966 | 109,260 |
Estimated Fair Value | Level 2 | ||
Financial liabilities: | ||
Interest-bearing deposits | 760,730 | 747,211 |
FHLB advances, notes payable, and financing leases | 103,966 | 109,260 |
Estimated Fair Value | Level 3 | ||
Financial assets: | ||
Loans, net | $ 1,005,188 | $ 976,636 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis (Details) - Measured on a recurring basis - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Securities available for sale: | ||
Total securities available for sale | $ 104,652 | $ 106,256 |
Obligations of U.S. Government agencies | ||
Securities available for sale: | ||
Total securities available for sale | 5,966 | 10,312 |
Obligations of States and political subdivisions | ||
Securities available for sale: | ||
Total securities available for sale | 35,388 | 34,558 |
Mortgage-backed securities | ||
Securities available for sale: | ||
Total securities available for sale | 58,319 | 56,421 |
Subordinated debt investments | ||
Securities available for sale: | ||
Total securities available for sale | 3,013 | 3,030 |
Equity securities | ||
Securities available for sale: | ||
Total securities available for sale | 1,966 | 1,935 |
Level 2 | ||
Securities available for sale: | ||
Total securities available for sale | 104,652 | 106,256 |
Level 2 | Obligations of U.S. Government agencies | ||
Securities available for sale: | ||
Total securities available for sale | 5,966 | 10,312 |
Level 2 | Obligations of States and political subdivisions | ||
Securities available for sale: | ||
Total securities available for sale | 35,388 | 34,558 |
Level 2 | Mortgage-backed securities | ||
Securities available for sale: | ||
Total securities available for sale | 58,319 | 56,421 |
Level 2 | Subordinated debt investments | ||
Securities available for sale: | ||
Total securities available for sale | 3,013 | 3,030 |
Level 2 | Equity securities | ||
Securities available for sale: | ||
Total securities available for sale | $ 1,966 | $ 1,935 |
Fair Value Measurements - Non-r
Fair Value Measurements - Non-recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Securities available for sale: | ||
Non financial assets measured at fair value on a recurring basis | $ 0 | |
Non financial liabilities measured at fair value on a recurring basis | 0 | |
Fair Value, Nonrecurring | ||
Securities available for sale: | ||
Fair Value, assets | 29,783 | $ 25,465 |
Fair Value, Nonrecurring | Impaired Loans | ||
Securities available for sale: | ||
Fair Value, assets | 22,176 | 19,493 |
Fair Value, Nonrecurring | Loans Held For Sale | ||
Securities available for sale: | ||
Fair Value, assets | 5,190 | 3,555 |
Fair Value, Nonrecurring | OREO | ||
Securities available for sale: | ||
Fair Value, assets | 2,417 | 2,417 |
Fair Value, Nonrecurring | Level 2 | ||
Securities available for sale: | ||
Fair Value, assets | 7,607 | 5,972 |
Fair Value, Nonrecurring | Level 2 | Loans Held For Sale | ||
Securities available for sale: | ||
Fair Value, assets | 5,190 | 3,555 |
Fair Value, Nonrecurring | Level 2 | OREO | ||
Securities available for sale: | ||
Fair Value, assets | 2,417 | 2,417 |
Fair Value, Nonrecurring | Level 3 | ||
Securities available for sale: | ||
Fair Value, assets | 22,176 | 19,493 |
Fair Value, Nonrecurring | Level 3 | Impaired Loans | ||
Securities available for sale: | ||
Fair Value, assets | $ 22,176 | $ 19,493 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Changes in goodwill | ||
Balance at beginning of the period | $ 9,391 | $ 5,237 |
Balance at end of the period | 9,391 | 9,391 |
Virginia Partners Bank | ||
Changes in goodwill | ||
Partners acquisition | $ 4,154 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Core Deposit Intangible (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Changes in the core deposit intangible | |||
Balance at the beginning of the period | $ 3,373 | ||
Accumulated amortization | (183) | $ (76) | |
Balance at the end of the period | 3,190 | $ 3,373 | |
Core deposit intangible | |||
Changes in the core deposit intangible | |||
Balance at the beginning of the period | 3,373 | $ 1,069 | 1,069 |
Accumulated amortization | (183) | (346) | |
Balance at the end of the period | $ 3,190 | 3,373 | |
Liberty Bell Bank | Core deposit intangible | |||
Intangibles | |||
Amortization period | 7 years | ||
Virginia Partners Bank | Core deposit intangible | |||
Intangibles | |||
Amortization period | 120 months | ||
Changes in the core deposit intangible | |||
Partners acquisition | $ 2,650 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Core Deposit Intangible Amortization (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Remaining amortization | |||
2020 | $ 530 | ||
2021 | 600 | ||
2022 | 520 | ||
2023 | 467 | ||
2024 and thereafter | 1,073 | ||
Total | 3,190 | $ 3,373 | |
Core deposit intangible | |||
Remaining amortization | |||
Total | $ 3,190 | $ 3,373 | $ 1,069 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Deposits Purchased Premium and Discount (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Deposits Purchased Premium and Discount | ||
Balance at the end of the period | $ (31) | |
Deposits Purchased Premium (Discount) Net | ||
Deposits Purchased Premium and Discount | ||
Accretion period | 5 years | |
Balance at the beginning of the period | $ (31) | $ 27 |
Accumulated amortization, net | (20) | |
Balance at the end of the period | $ (31) | (31) |
Virginia Partners Bank | Deposits Purchased Premium (Discount) Net | ||
Deposits Purchased Premium and Discount | ||
Partners acquisition | $ (38) |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets - Deposits Purchased Premium and Discount, Amortization and Accretion (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Remaining accretion | |||
2020 | $ (8) | ||
2021 | (15) | ||
2022 | (6) | ||
2023 | (2) | ||
Net deposit discount | (31) | ||
Deposits Purchased Premium (Discount) Net | |||
Remaining accretion | |||
Net deposit discount | $ (31) | $ (31) | $ 27 |
Virginia Partners Transaction -
Virginia Partners Transaction - Consideration Paid and Fair Value of Identifiable Assets Acquired and Liabilities Assumed (Details) $ in Thousands | Nov. 15, 2019USD ($)itemshares | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Liabilities assumed: | ||||
Goodwill | $ 9,391 | $ 9,391 | $ 5,237 | |
Virginia Partners Bank | ||||
Business combination | ||||
Conversion of common stock | shares | 1.7179 | |||
Number of new branches added | item | 3 | |||
Consideration paid: | ||||
Cash consideration | $ 2 | |||
Common stock issued in acquisition | 52,282 | |||
Stock options issued in acquisition (replacement awards) | 350 | |||
Total consideration paid | 52,634 | |||
Assets acquired: | ||||
Cash and cash equivalents | 6,743 | |||
Investment securities | 65,373 | |||
Investments in correspondent bank stock | 3,670 | |||
Loans | 357,127 | |||
Premises and equipment | 6,969 | |||
Accrued interest receivable | 1,155 | |||
Intangible assets | 2,650 | |||
Deferred tax asset | 1,239 | |||
Other assets | 9,242 | |||
Total assets acquired | 454,168 | |||
Liabilities assumed: | ||||
Deposits | 348,552 | |||
Other liabilities | 56,408 | |||
Total liabilities assumed | 404,960 | |||
Net assets acquired | 49,208 | |||
Noncontrolling interest in consolidated subsidiaries | 728 | |||
Goodwill | $ 4,154 |
Virginia Partners Transaction_2
Virginia Partners Transaction - Fair Value of Loans Acquired (Details) - Virginia Partners Bank $ in Thousands | Nov. 15, 2019USD ($) |
Fair value adjustments made to the amortized cost basis to present a fair value of the loans acquired | |
Gross principal balance | $ 362,916 |
Fair value adjustment on pools of non‑credit impaired loans | (4,990) |
Fair value adjustment on purchased credit impaired loans | (799) |
Fair value of acquired loans | $ 357,127 |
Virginia Partners Transaction_3
Virginia Partners Transaction - Credit Adjustment on Acquired Impaired Loans (Details) - Virginia Partners Bank $ in Thousands | Nov. 15, 2019USD ($) |
Fair value of loans acquired under ACS 310-30 | |
Contractually required principal and interest at acquisition | $ 6,713 |
Contractual cashflows not expected to be collected (non‑accretable discount) | (1,371) |
Expected cash flows at acquisition | 5,342 |
Interest component of expected cash flows | (673) |
Fair value for loans acquired under ASC 310‑30 | $ 4,669 |
Virginia Partners Transaction_4
Virginia Partners Transaction - Core Deposit Intangible (Details) - Virginia Partners Bank - USD ($) $ in Millions | Nov. 15, 2019 | Dec. 31, 2019 |
Fair value of the core deposit intangible | ||
Acquisition related costs | $ 1.9 | |
Core deposit intangible | ||
Fair value of the core deposit intangible | ||
Core deposit intangible value | $ 2.7 | |
Core deposit intangible (as a percent) | 1.01% | |
Core deposit intangible, amortization period | 10 years |